on November 22, 2024
In many communities, you can find a credit union right across the street from a bank. Both offer convenient access to checking and savings accounts, loans, and other financial services — all federally insured for your peace of mind.
So, why does it matter which one you choose?
Here are four key differences between a credit union and a bank — and what they mean for you and your money:
Type of Ownership
Traditional banks provide financial services to customers and focus on maximizing profits for shareholders. A credit union, on the other hand, is a financial cooperative made up of members — not customers.
While a bank’s profits are distributed to shareholders, a credit union returns earnings to members through better rates and lower fees.
“Our members are our owners. That’s who we’re in business for,” said Liz Amundson, Director of Compliance and Audit at Honor Credit Union, which has 28 member center locations across Southwest Michigan and the Upper Peninsula.
“Credit unions are run by the people in the community, and the foundation of a credit union is people helping people in their community.”
Interest Rates
Interest Rates
As not-for-profit institutions, credit unions often offer members better rates on financial products and services than traditional banks.
For example, Honor Credit Union currently pays 5.15% APY on its free Benefits Checking accounts. When it’s time to borrow, members can also take advantage of competitive home mortgage rates and affordable auto loans.
“We are able to take that money that would normally be paid to investors and reinvest it in the members in the form of lower rates on loans or higher rates for dividends,” Amundson said.
Personal Service
Because a credit union is community-based and not owned by a Wall Street corporation, service is often more personal and relationship-focused. Honor Credit Union is headquartered in Berrien Springs, Michigan, and has a strong presence in communities across the state.
Members can always pick up the phone or stop by any of Honor’s 28 full-service member center locations to talk with a real person who’s there to help.
“Once people join a credit union, they don’t go back to a bank,” Amundson said. “They get better service at a credit union because that’s who we’re working for – the people who walk in that door.”
Community Involvement
With local roots, it’s only natural that credit unions are deeply involved in supporting the communities where their members live. In 2023, Honor Credit Union donated more than $734,000 to benefit hundreds of community organizations such as the United Way, YMCA, and Habitat for Humanity. Honor also awarded $28,000 in scholarships to local high school seniors and $15,000 in awards to local teachers.
More than 450 Honor team members also volunteered their time to clean Michigan beaches, make holiday cards for veterans, and support local nonprofits during CU Kind Day in October.
“We aren’t forced by regulation to give back to our communities (like banks are). We do this freely,” Amundson said. “We are community based, and we are invested in our communities.”
While credit unions and banks share many similarities, the key differences can have a big impact on your finances. Now it’s time to see what difference Honor Credit Union can make for you.
Whether you’re looking for a low mortgage rate on a home or want to save for something special with a free, high-yield Benefits Checking account, Honor Credit Union has solutions to support your financial success.
You can also turn to Honor for car loans, home equity loans, credit cards, and more—including Connect Checking, which pays 1% back on dining, gas, and grocery purchases made with your debit card.
“We have products that really are tailored to the member,” Amundson said. “It gives our members the option to choose what works best for them.”
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Our team is here to help, give us a call at 800.442.2800, or schedule an appointment with an expert to talk about your options today.
Community Impact
$11,763,087
Total Interest & Incentives Paid to Members in 2023
$734,293
Donated in Support of 669 Organizations in 2023
$235,600
Homeownership Grant Funds Awarded to Homebuyers in 2023
94,620
Pounds of Paper Recycled During Free Shred Day Events in 2023