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Most individuals desire the convenience and safety of an institution to store their money, but before opening an account, you have to choose between a credit union and a traditional bank. While banks and credit unions typically offer the same services, such as personal loans and checking accounts, there are distinguishable differences in their business models. Take a closer look at these variations below.

3 Ways a Credit Union Differs From a Bank

1. You Must Be a Member to Utilize the Services

One of the biggest differences between a credit union and a traditional bank is the membership requirement. Even if someone doesn't have an account, they can utilize the services of a bank for a fee. For credit unions, you have to be a member. However, membership isn't restrictive and usually only requires that a person or business lives or works within a specific geographical area.

2. Owned By Its Members

Credit UnionCredit unions also differ from a bank because they are owned by their members. One of the biggest advantages of a member-owned organization is that the profits benefit the members instead of a select few at the top of the entity, as is the case with most traditional banks. Earnings can also be used to lower interest rates and fees while boosting the percentage of interest earned on savings accounts. Such benefits allow members to take advantage of low-rate loans for home and vehicle purchases.

3. Community Focused

Another difference between the two types of banking institutions is their level of community involvement. A local credit union usually places a heavy amount of emphasis on outreach, whether it be for educational or charity purposes. Such benefits also work to grow their membership which serves all current members by bringing more security to the organization. While a local bank may have more community focus than a big bank, neither outlet is known for matching that of a credit union.

 

If you're ready to bank at an organization that works for you, contact North Jersey Federal Credit Union in Totowa, NJ. For nearly a century, the credit union has served the needs of individuals and businesses throughout Passaic County. The institution strives to help their members gain financial independence while also assisting the needs of the local community. View their banking offerings online, and learn how you can become a member today by calling (973) 785-9200.

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