Whether your business is in the start-up stage or your brand is well-established, choosing between a bank and a credit union can be confusing. Which is better for your business assets, and which offers the most benefit long-term? Learn about the differences between the two types of financial institutions before considering which may be best for your specific business.
Banks & Credit Unions: The Differences & Similarities
The biggest difference between banks and credit unions is their respective business models. Banks are for-profit while credit unions are not. Both options offer protection for up to $250,000 per account through different avenues; banks protect your funds via FDIC and credit unions offer protection via the NCUA. Banks report their earnings to shareholders while credit unions disperse earnings among members.
Think of it like this: Banks are similar to big box stores in that they offer a variety of services while credit unions resemble the financial equivalent of subscription-based savings clubs (you know, the type of place where you can purchase 5 gallons of mayonnaise on-the-cheap).
Both credit unions and banks offer financial services such as loans, interest bearing accounts, lines of credit, and financial advising; however, you’re likely to get more bang for your buck from a credit union thanks to low interest rate loans and personalized service.
Benefits of Business Banking
Banks provide the same financial services as credit unions, but rates may not be as attractive. In exchange, most banks have numerous branches throughout the country, which means you will likely have access to in-house banking regardless of your location. Traveling to a conference? Attending a trade show? Considering a new location for your company? Your bank’s presence will follow you. Additionally, banks are more likely to offer hi-tech services, like mobile apps, to customers to enhance the convenience of banking.
Benefits of Business Credit Union Accounts
Unlike banks, credit unions are accountable directly to their members. Although credit unions may only offer a handful of local branches, they are more than willing to work with other credit unions should you need to relocate your business. When compared with banks, credit unions offer interest-bearing accounts that provide a higher return on investment as well as lines of credit with remarkably low interest rates. Some business owners consider credit unions the “fine dining” of the financial world for the level of personalized service they offer as well. You’re not simply another dollar sign when you walk into your credit union.
The Choice is Yours
Now that we’ve broken down the specifics about banks and credit unions, it’s time for you to weigh the risks and benefits of each. After all, this is your livelihood we’re talking about. Are you looking for excellent customer service and members-only discounts, or do you value the freedom to take your business anywhere without the need to disrupt your company’s finances?
A full list of banks and credit unions in our region can be found at https://web.northcentralmass.com/Finance-and-Insurance/Banks-Credit-Unions