Community bank or credit union?

You have so many choices when opening an account or applying for a loan; online banks, national banks, regional or local banks, and credit unions are the most common options that come to mind. One might be tempted to lump all banks and credit unions into the same bucket, but there are differences. The distinctions between national and regional banks can seem pretty clear (if not, check out what we have to say about banking local), but what about the difference between local or regional banks and credit unions? There are a lot of similarities, and a few definite differences. Having a better understanding of the two will no doubt help you to make the best choice for you and your family.

Structure

A credit union is a cooperative entity and is owned by its members. Some, but not all, credit unions have membership restrictions or eligibility requirements that limit who can join, as each credit union typically serves a specific community or group, such as employees of a particular company or members of an organization. Additionally, a credit union might charge a fee to become a member. Because these institutions are meant to be hyper-local, you may not have many physical locations to choose from, either in your community or outside it, nor as many free or limited-fee ATMs to use outside a certain radius. 

Community banks like UBT are privately owned and not limited to specific requirements to bank with them. Anyone can open an account, and banks don’t have requirements to be a customer. While some products the bank offers may have fees, there are many free account options, and banks don’t charge a fee to become a customer. With community banks, you often have access to more physical locations in different areas and more ATMs available to serve you.  

Product offerings

Community banks and credit unions offer the same basic products, such as savings and checking accounts, loans, and credit cards, and both work to keep any account or transactional fees to a minimum (think: non-sufficient fund fees, etc.). Beyond the basics, some credit unions may have a few more products in common with community banks, such as certificates of deposit, among others.

However, banks like UBT offer additional products such as health savings accounts and investment services** such as estate management, financial planning, and retirement plans, in addition to standard banking products. This allows you to have your financial services in one place, and ensures you can get what you need from people you are already familiar with.

Customer and community support

Both community banks and credit unions pride themselves on providing personalized and friendly service to their customers or members. Both like to take the time to get to know their customers, educating them on fraud and providing information to help them make the best possible financial decisions. 

Community banks like UBT channel most of their loans — and a solid percentage of their profits — into the neighborhoods where their depositors live and work, helping to keep local communities vibrant and growing. In addition to supporting many nonprofits in the community, bank profits are also directed to help make improvements for customers, like investing in more offerings, product upgrades, and better technology. On the other hand, credit unions are technically considered not-for-profit, and profits, after operating costs, are returned to their customers in the form of dividends and often product improvements.  

Security and technology

When it comes to deposit insurance, most community banks are regulated and protected by the Federal Deposit Insurance Corporation. You can check with the FDIC’s BankFind site to ensure that your bank is insured. Most credit unions are also regulated and insured, but by the National Credit Union Administration (NCUA) rather than the FDIC. You can visit NCUA’s credit union locator to make certain that the credit union you are interested in is covered.

Nowadays, where you have physical branch locations is important, but in today’s digital age, you should also look at the technology offered by the financial institution you’re interested in. Generally speaking, a bank can offer better technology and online offerings because it is investing in these initiatives to better support its customers.

Factors to consider

In conclusion, both credit unions and community banks have much to offer, but ultimately, financial needs and personal preference will be the deciding factor when you’re looking for a local financial institution.

If you’re looking for somewhere that offers branches and ATMs across the state, easy online account opening and maintenance through our UBTgo app, outstanding customer service, and a wide variety of product offerings, then UBT might be the place for you.