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Many consumers are looking at their financial institutions with a more critical eye these days. In the wake of taxpayer bank bailouts, decreased rates on savings accounts, and impending disappearance of free checking, its not surprising that bank customers are questioning whether they should keep their money at a bank. Last year, Bank of America alone lost 400,000 accounts, according to the Move Your Money project.

One alternative to big banks is credit unions. With services and products as competitive as big banks offerings, credit unions are becoming more popular among consumers.

Credit unions operate very differently from big banks. Banks are owned by investors and shareholders, while credit unions are non-profit institutions owned by members. When you join a credit union, you are essentially becoming part-owner. Also, since credit unions typically serve a particular community or group, such as the local firefighters or the employees of a company, there are different qualifications to join each credit union.

So which kind of financial institution is right for you? Lets take a look at some basic differences to consider when choosing between banks and credit unions.

Products & Rates

Most banks, large and small alike, offer a wide variety of basic financial products, such as checking and savings accounts, loans, and CDs.

For the most part, credit unions offer the same basic products. However, because credit unions are exempt from paying most state and federal taxes, they can typically offer higher savings account rates and lower rates on loans.

On the flip side, large banks can typically offer a wider variety of financial services, such as wealth management, business banking, and investments, simply because they are larger and have more resources than the average credit union.

Customer Service

Customer service can be great at banks, especially if a customer gets to know the employees at their local branch. But when it comes to the big banks, such as Bank of America, Citibank, and Chase bank, Credit Karma user reviews consistently mention the difficulty of dealing with such a large institution when it comes to getting something done. It seems that big banks can be less in touch with their customers due to their size.

Credit unions often have just a handful of branches concentrated in one region, so they can offer more personalized customer service to their members. Founded on principles of being community-oriented and consumer-friendly, credit unions are known for exceptional customer service and personal banking relationships. The Credit Karma credit union reviews section is full of positive comments when it comes to customer service.

Convenience

When it comes to convenience, big banks are ahead. Overall, they are very convenient when it comes to service locations, ATMs, and hours thanks to the sheer size of their network of branches. Most big bank branches are open Saturday mornings and banks have ATMs in convenient locations.

Banks are also more likely to have full-service websites and online banking, as well as 24-hour customer service lines. Also, with mobile banking and ability to pay by smartphone an inevitable innovation, biog banks have a leg-up when it comes to technological advances in banking.

Credit unions dont offer the availability that big banks do. They are smaller institutions with fewer brick-and-mortar locations and convenient ATMs. However, they are making themselves more available and easier to find, thanks to websites such as CU Service Centers, where you search for a credit union branch near you, and CO-OP, which helps you locate credit union ATMs.

The Bottom Line

So which one is right for you?

It all depends on what is best for your own financial situation. For example, if you tend to travel a lot, a big bank may be a good choice for you because of the convenience it offers. If you long for casual, personalized customer service and a stake in a business, joining a credit union may be the way to go.

Whichever you choose, make sure you research the services and rates offered by the financial institution youre considering. Check out MoneyAisle.com to compare banking rates at all institutions and use findacreditunion.com to search for a credit union in your town.

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