Credit Unions vs. Banks

Despite the fact that both of these types of traditional banking institutions virtually perform the same services for millions of Americans, credit unions and banks actually have very unique and different business and lending models. One of the biggest differences is that credit unions operate as a non-profit and are governed by their members elected leader. Most credit unions were established to serve a unique group of people, people that belonged to a certain employer, government employees, and/or other requirements. Now a days it is easy to become a member at your local credit union. And the benefits are quickly out weighing the benefits of banks. Credit unions often can offer lower interest rates and higher approval rates on loans to members. They often also have the same benefits like, free checking, convenient ATM access, and online banking. It is no wonder people are switching to credit unions all over the nation however, credit unions may be operating "out of accordance" with the reason they were set-up. Traditional banks and credit unions have always had their differences. One of the main arguing point that banks often complain about is the fact that credit unions are not required by law, like they are, to spend a portion of their earning on community reinvestment. Banks spend millions of dollars a year reinvesting in the communities they serve and credit unions are exempt to this law. Also, banks are sick of credit unions operating as a non-profit. They often take in earnings much higher than small community banks and feel it is outrageous to claim they are "not-for-profit" and feel they should be paying higher business taxes and insurance coverage like banks are forced to. Either way if you have bad credit, you most likely will not be approved to bank at either of these institutions, unless they implement a second chance bank account

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