- Credit union and bank side by side
- Ownership and where the profits go
- Who's allowed to join a credit union
- Deposit insurance works almost the same way
- The privately insured credit unions to check for
- Rates and fees, as the agencies describe them
- My advice on choosing a credit union or a bank
- Frequently asked questions
A credit union is a not-for-profit owned by its members, who usually share a common bond such as an employer or area; a bank isn't member-owned. Both take deposits and make loans. As of Nov 2026, federally insured credit unions cover deposits up to 250,000 dollars through the NCUA, and FDIC-insured banks cover at least 250,000 dollars through the FDIC.
From the outside, a credit union and a bank can look almost identical: checking accounts, savings, cards and loans. The differences sit underneath, in who owns the institution, who's allowed to join and which federal agency stands behind your money. Everything here comes from the US agencies themselves, the NCUA and its consumer site MyCreditUnion.gov for credit unions and the FDIC for banks.
Credit union and bank side by side
| Credit union | Bank | |
|---|---|---|
| Ownership | Owned and controlled by its members; a member-elected volunteer board runs it | Not member-owned; MyCreditUnion.gov notes banks don't return surplus income to members as dividends |
| Who can join | People who share the credit union's field of membership | No field of membership; the FDIC says large and small banks across the country offer insured accounts |
| Federal insurer | National Credit Union Share Insurance Fund, run by the NCUA since 1970 | FDIC Deposit Insurance Fund; the FDIC was founded in 1933 |
| Standard cover | 250,000 dollars per member-owner, per ownership type, at each credit union | 250,000 dollars per depositor, per ownership category, at each bank |
| Getting covered | Automatic when you join a federally insured credit union | Automatic when you open a deposit account at an FDIC-insured bank |
| Check it's insured | NCUA sign at teller stations and online; NCUA Credit Union Locator | FDIC BankFind Suite |
| Coverage calculator | NCUA Share Insurance Estimator | FDIC Electronic Deposit Insurance Estimator (EDIE) |
Ownership and where the profits go
MyCreditUnion.gov describes a credit union as a not-for-profit financial institution that accepts deposits, makes loans and offers a wide range of other financial services. Members own and control it, and a volunteer board elected by those members manages it. Its cooperative structure means, in the site's words, one member's savings becomes another member's loan.
The biggest practical difference is what happens to the surplus. MyCreditUnion.gov says profits made by credit unions are returned to members as reduced fees, higher savings rates and lower loan rates, and that, unlike banks, credit unions return surplus income to members as dividends. Banks still take deposits, make loans and provide a wide range of services, so the everyday products are much the same.
Who's allowed to join a credit union
You can walk into most banks and open an account. A credit union is different: its members share a common bond, called its field of membership. MyCreditUnion.gov lists the usual routes in:
- Your employer, since many employers have their own credit unions
- Your family, as most credit unions let members' families join
- Where you live, work, worship or go to school, for credit unions that serve a geographic area
- A group you belong to, such as a place of worship, school, labor union or homeowners' association
The NCUA's Credit Union Locator lets you search by address, name or charter number to see what's near you and which services each one offers.
Deposit insurance works almost the same way
The NCUA says the National Credit Union Share Insurance Fund, set up by Congress in 1970, is similar to the deposit insurance the FDIC provides. Both are backed by the full faith and credit of the United States. Both cover up to 250,000 dollars per person per ownership type at each institution, both protect IRA retirement accounts separately, and both are automatic: you don't apply.
The FDIC explains how that adds up. A single account and a joint account at the same bank are insured separately, and so are an IRA and your other single accounts, because they're in different ownership categories. Neither agency insures stocks, bonds, mutual funds, life insurance, annuities, municipal securities, safe deposit boxes or crypto assets, even when the bank or credit union sells them to you. Both say no one has lost a penny of insured deposits at an institution they cover.
The privately insured credit unions to check for
This is the detail that catches people out. The NCUA says several state-chartered credit unions are insured by private insurers instead, and that this non-federal cover isn't backed by the full faith and credit of the United States. Federally insured credit unions must display the official NCUA sign at every teller station and on their website, and the NCUA suggests members confirm their credit union is federally insured using its Credit Union Locator. For a bank, the FDIC's BankFind Suite does the same job and also helps you spot fake bank websites.
Many banks and credit unions also offer retirement accounts, so see Roth IRA versus traditional IRA for the two main types.
Rates and fees, as the agencies describe them
MyCreditUnion.gov says that, on average, credit unions offer higher savings rates and lower loan rates, tend to charge lower fees and require lower deposit balances. That's the regulator's general description rather than a promise about any one institution, so compare the actual account terms. The FDIC's pages focus on insurance rather than rates, and note that 5.9 million US households don't have a bank account at all. If you're also moving money abroad or between apps, my comparisons of Wise vs Revolut and PayPal vs Venmo cover the non-bank side.
My advice on choosing a credit union or a bank
It depends on whether you're eligible to join a credit union and what you need from the account. If you qualify through work, family, where you live or a group, a member-owned credit union is worth comparing, because MyCreditUnion.gov says surplus goes back to members. If you need a particular product or a big branch network, a bank may suit you. Whichever you pick, confirm it's federally insured with the NCUA or FDIC tools first. The cover is 250,000 dollars per ownership category at each institution, as of Nov 2026. This is general information, not personal advice.
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Frequently asked questions
Is my money as safe in a credit union as in a bank?
At a federally insured credit union, deposits are covered by the NCUA's Share Insurance Fund up to 250,000 dollars per member per ownership type, which the NCUA says is similar to FDIC cover at banks. Both are backed by the full faith and credit of the United States.
Can anyone join a credit union?
Not always. Members share a common bond called a field of membership, such as an employer, family link, local area or group like a labor union or homeowners' association.
Are all credit unions federally insured?
No. The NCUA says some state-chartered credit unions use private insurers that aren't backed by the United States. Look for the NCUA sign or check the NCUA Credit Union Locator.
Do credit unions charge lower fees than banks?
MyCreditUnion.gov says credit unions tend to charge lower fees and, on average, offer higher savings rates and lower loan rates. Compare the terms of the accounts you're looking at.
Does FDIC insurance cover investments bought at my bank?
No. The FDIC says it doesn't insure stocks, bonds, mutual funds, annuities, life insurance, Treasury securities, municipal securities, safe deposit boxes or crypto assets.
Can I get more than 250,000 dollars of cover?
Yes, across ownership categories. The FDIC says single, joint and retirement accounts are insured separately, and the NCUA covers IRA and KEOGH accounts separately too.
