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What's the Difference Between Banks and Credit Unions?

Every day, more businesses switch to solely plastic or digital payment methods. And with the rise of instant transfer platforms like Zelle®, it’s easy to see why. Gone are the days of paper monies being the preferred payment option. With that in mind, it’s becoming increasingly important to have access to a debit card, bank account, and credit options.

So where do you store your money? Both banks and credit unions offer everything you need to function in the modern world, but that’s where the similarities end.

Banks, like most businesses, are for-profit corporations. This means their goal is to gain more money for the investors and top executives every year. This is also why banks have far higher fees than the average credit union.

NWCU and other credit unions are not-for-profit. Plus, they’re run and operated by members of the credit union and community. The major difference is that credit unions funnel money back into the community–here’s how.

  • Scholarships
  • Mini-grants
  • Sponsorships
  • Higher deposit rates
  • Lower fees.

These benefits translate into more money circulating in the community.

For example, NWCU has zero fees for balance transfers. Balance transfers allow you to pay off debt using your credit card. Big banks often have fees ranging from 3-5% of the transferred sum.

History of Credit Unions

Credit Unions are often community or career-based. For example, when we started in 1949, Northwest Community Credit Union was known as Weyerhaeuser Springfield Federal Credit Union. Originally, it was only open to workers of the mill and their families. Over time, we’ve expanded our membership requirements to residents of 15 Oregon counties:

  • Benton
  • Clackamas
  • Coos
  • Crook
  • Deschutes
  • Douglas
  • Jackson
  • Jefferson
  • Josephine
  • Klamath
  • Lane
  • Linn
  • Marion
  • Multnomah
  • Washington

The original purpose for credit unions came from the need for middle- and lower-class neighborhoods to gain access to banking. Traditional banks have a history of charging fees that middle and lower classes can’t afford to pay. Eventually, people began pooling their money together and borrowing against the group’s funds. Thus the first credit union was born. Weyerhaeuser Springfield Federal Credit Union started when mill workers pooled their collective cash in a lunch box for emergencies.

The idea of not nickel-and-diming members is why credit unions like NWCU don’t have monthly fees for basic checkings/savings accounts.

Benefits of a Credit Union

You’ll gain certain benefits banking with a credit union. Including but not limited to:

  • Personalized Interaction: Unlike big banks, you’ll often have access to a financial service representative who knows you and your financial details on a personal level--which makes it easier to ask for help when you need it. You’re not an account balance at a credit union. You’re a member.

  • Lower Fees: Credit unions have less focus on making an excess profit - which is why they have fewer and more affordable fees. Traditional banks can charge $5-10 monthly on average for a regular checking account. That’s $60-120 per year just for choosing them to hold your money. The loss adds up when you start adding in other fees and limitations.

  • Better Investment Options: You want to make your money work for you. Our Financial Representatives will sit down with you to uncover the best investment plan possible. While other institutions may charge for this service, meetings with our Representatives are always personalized, with no obligation to open an account. This ties back into you being a member and not an account balance. At NWCU, you can get into contact with a licensed investor and learn your options free of charge.*

  • Supporting your Community: Money in a credit union cycles back into the community, which helps create a certain level of financial stability for everyone. For every dollar kept in a community, that’s another dollar that’s freed up for business or personal needs. Plus, many credit unions do charity and community outreach programs that help teach financial literacy. Here’s an example of one way NWCU supports the community. If you download our member benefits app, then you’ll get access to dozens of coupons, promotions, and price discounts for a bevy of surrounding businesses just for banking with us.

Is My Money Safer in a Credit Union?

Most banks get insurance through the FDIC. The FDIC, also known as The Federal Deposit Insurance Corporation, insures each depositor (that’s you) for up to $250,000 or more depending on how accounts are structured. However, the FDIC only covers banks.

Thankfully, credit unions have their own insurance called the NCUA or National Credit Union Administration that works essentially the same way. This means your money is safe in a credit union, even in a worst-case scenario. Credit union fraud representatives live and work in your community and the surrounding area, which means it’s much easier to clear up any issue you might have.

What Makes Northwest Community Credit Union Different?

First and foremost, NWCU has a focus on uncommon care. When you step into any of our many locations, we treat you like family. That’s more than just smiling and being polite. We take a personal investment in your financial readiness and stability.

Second, NWCU started right here in Oregon. We know our community, our culture, and our members.

Third, we have fewer fees than you might expect. And we’ll work with you to make sure you’re not charged frequently. Whether that’s changing your account type or setting up auto-pay services to help avoid late fees, we want to help.

Lastly, NWCU makes a point to take care of our employees. From the newest teller all the way to the CEO, we’re a family. That creates a positive work culture that ensures you receive a pleasant, higher quality, and more-thorough service experience.

So, in short, if you’re community-focused, prefer to avoid hefty fees, and understand the value of personalized service, then chances are, a credit union is best for you.

Step into any of our branches today and learn how NWCU can help you.

*Securities and investment advisory services offered through Cetera Advisor Networks LLC, member FINRA, SIPC. Cetera is under separate ownership from any other named entity. Cetera Advisor Networks LLC IS NOT A BANK OR CREDIT UNION, AND THE PRODUCTS WE OFFER ARE NOT FEDERALLY GUARANTEED OR FDIC OR NCUA INSURED, ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY A FINANCIAL INSTITUTION, AND INVOLVE RISKS INCLUDING POSSIBLE LOSS OF PRINCIPAL, AND MAY FLUCTUATE IN VALUE.