Okay I admit it, for most of my life all of my finances have been handled through a bank. And it never even occurred to me to consider a credit union instead.

That is, until I started reading up on the differences between credit unions and banks and how I could benefit from switching. Here are the glaring points that mattered most to me, especially in this economy.

Banks are working for a profit. When you deposit your money, banks use those funds to build a profit by investing in consumers looking for loans. Banks charge a higher interest rate in order to make a profit to benefit the owners and stock holders. They also charge higher fees, typically pay lower interest to depositors, and even charge for certain services all to make a profit for their stockholders.

Credit unions on the other hand are in it for their members. Credit unions are not-for-profit financial institutions that also invest and offer loans. However, credit unions return as much back to their members as possible instead of paying dividends to a small group of investors. Credit unions do this through keeping fees to a minimum, paying a higher interest rate to depositors, charging a lower interest rate to borrowers, offering many services for free, and some credit unions even cut checks to their members.

Both banks and credit unions are backed by federal regulatory agencies–NCUA for credit unions and FDIC for banks–and both offer similar services and products.

But here’s my take based on the for-profit nature of banks and not-for-profit credit union principles… at the end of the day, credit unions have their members’ back where as banks have their owners’ and investors’ backs. That’s why I’m a credit union member.

Check out these links for more credit union goodness!

http://www.lookoutforthelittleguy.org/ - You can create your own “little guy” like the pic above!

http://www.creditunion.coop/ - More about credit unions as well as consumer resources