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Should I Use a Bank or a Credit Union for My Business Account

If you’re a business owner and you have come to a fork in the road, wondering whether you should go to a bank versus a credit union for your business account, there are a few key things to consider in making the right choice. Banks and credit unions may not sound especially different. After all, they both have checking, savings, and money market accounts. Both provide home loans, auto loans, and offer refinancing options. Both can even offer account solutions for businesses, but much like these different account types, not all things are created equal between banks and credit unions.

If you find yourself asking whether a bank or a credit union for your business account is the better choice, read on for a deeper understanding of the similarities (and differences) between the two.

Similarities Between Banks and Credit Unions

Banks and credit unions offer many of the same types of services: deposit accounts (such as checking, savings, money market, and certificates of deposit), auto and home loans, refinancing, HELOCs, and home equity loans, credit cards, and other financial services.

Both banks and credit unions can operate online or in-person, and both have their accounts federally insured, by the FDIC and the NCUA, respectively.

Differences Between Banks and Credit Unions

The most notable difference between credit unions and banks is probably in how they’re organized and run.

Banks are for-profit. They have the shareholders in mind and will have more account fees, requirements, and penalties in order to increase their dividends. What’s written in their terms and conditions is more or less company law. They’re generally less flexible and more inclined to be business- and profit-centered.

Banks also generally have an online and/or brick-and-mortar presence, and some have branch locations available to their customers around the country. However, as a customer, you have very little say in how things regarding your account are run and, therefore, are more commonly subject to the will and practices of the bank.

Credit unions are member-owned, not-for-profits. The “profits” at a credit union are shared among the owners of the credit union: it’s members. They usually offer higher interest rates for accounts and more flexible conditions for account holders. That is, even if you don’t have squeaky-clean credit, you may still be able to join a credit union. They’re going to look at your particular situation.

One of the benefits of a credit union is a more member-focused environment. There tends to be more flexibility with making payments, and you’ll likely feel closer to the employees. You’re not just an account number; you’re a voice.

Members also have a say in the practices and parameters of the credit union. They have a vote and can be actively engaged in the financial system that directly affects them.

Although there might be fewer branch locations of a credit union, credit unions provide services to their members wherever they go, such as by having ATMs across the country and charging no fees to withdraw money from your accounts.

Interesting Difference Between Deposit Accounts

As a business owner, you naturally want to build your business to where it’s stable and thriving. Deposit accounts at credit unions offer consistently higher annual percentage yields, as banks are more concerned with returning higher dividends to their shareholders than providing benefits to their customers. Banks offer minimal interest on their deposit accounts, such as savings, money market, and CDs, and usually nothing at all on their checking accounts.

Additionally, if you’re going to be looking for a business loan, credit unions may not only be better able to approve you, the interest rate at which you repay the loan could be significantly lower and save you money over time. Credit unions commonly offer shorter repayment periods so as to minimize the length of repayment, again, potentially saving you more over time.

Comparing Loan Rates


Banks have a primary focus on profits and are inclined to have higher interest rates on loan products, such as business loans, auto loans, personal loans, and even credit cards. They make their money through fixed repayment periods, fees, and penalties for overdrawing an account.

Credit Unions

Loan rates at credit unions are often noticeably lower and are a major appeal for a lot of people. Lower business loan interest rates enable small business owners to expand and further impact their local economy. Credit unions can offer lower loan rates because they’re not profit-driven. Any extra money goes directly back to members in the form of lower fees and interest rates.

Transaction Fees

Because credit unions tend to be more community-oriented, they have lower fees for transactions such as wire transfers. They don’t normally have minimum balance requirements (and therefore no fees if you don’t meet the requirements) and don’t charge account servicing fees. This can save a business hundreds of dollars per year.

Most transactions, including withdrawals, electronic transactions, and checks, are free of charge. The fees for overdrawing your account are also smaller than what a bank would charge, as are the fees for bounced checks.

Technological Presence

Banks are traditionally thought to be more often current with mobile apps and online banking capabilities, but that’s not true. Many credit unions offer a strong online and mobile presence with optimal technological services that can help your business function smoothly. Since this is an important component for many businesses, it’s best to ask upfront what the technological side the credit union or bank has to offer. If you’re seeking a business account or business loan and are interested in learning more about the business services offered by Rivermark Community Credit Union, any of our experts will be happy to help you discover and build a solid business financial foundation.

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