Another important distinction between these two institutional types is that credit unions tend to offer more attractive rates and fees on the whole. Not only are they focused on maximizing profits for members rather than outside investors, but their not-for-profit status exempts them from the same kinds of taxes banks must pay.6
As a result, they tend to offer higher interest rates on savings accounts and CDs, lower rates on loans, and lower account fees than banks.7 This combination of benefits allows customers to maximize their returns on deposits and minimize their loan costs.
Banks offer lower rates on customer deposits and higher rates on loans because of their higher tax burden and their motive to maximize profits for investors.However, neither all banks nor all credit unions are the same. Some banks offer more competitive rates than credit unions. It’s best to shop around before assuming a credit union will grant you the better deal.