3297: Credit Unions vs. Banks by Daniella of I Like to Dabble on How to Make Great Financial Decisions

Summary

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Podcast Summary: Optimal Finance Daily – Episode 3297

Title: Credit Unions vs. Banks by Daniella of I Like to Dabble
Host: Diania Merriam
Date: September 27, 2025

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Episode Overview

This episode, narrated by host Diania Merriam, explores the differences between credit unions and banks with guidance from financial writer Daniella of I Like to Dabble. The discussion focuses on the pros and cons of each type of institution, considerations for choosing where to store your money, and how these decisions impact your daily financial management. Listeners receive actionable insights for making optimal financial choices based on their individual needs.

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Main Discussion Points & Insights

1. Defining Credit Unions and Banks

• Credit Unions:

  • Not-for-profit institutions, run by and for their members (01:23).

  • "More than 118 million Americans hold $1.4 trillion in assets across 5,700 credit unions in America."
    (Daniella, 01:30)

  • Members have ownership and voting rights, leading to a more personal experience.

• Banks:

  • For-profit institutions aiming to maximize profit for stockholders (02:02).
  • Tend to be larger, with more branch locations and advanced online services.

2. Key Differences

• Profit Model:

  • Banks: For profit, higher fees/interest rates.
  • Credit Unions: Not-for-profit, return profits via lower fees, better rates, and perks.

• Member Experience:

  • Credit unions emphasize personalized customer service.
  • Banks offer comprehensive products and widespread accessibility.

3. Pros and Cons of Credit Unions

• Pros:

  • Excellent customer service—members are owners, not just customers (03:00).

  • Lower loan rates, higher savings rates—especially appealing for small business owners (03:32).

  • Low or no fees, often free checking/savings accounts (03:57).

  • Quote:

    "You'll definitely get more bang for your buck when you choose a credit union."
    (Daniella, 04:06)

• Cons:

  • Limited product offerings due to size (04:14).
  • Fewer branch locations, possible technology gaps (04:25).
  • Potential eligibility restrictions—must meet criteria to join some credit unions (04:51).

4. Pros and Cons of Banks

• Pros:

  • Broad range of products and services, including loans and retirement planning (05:00).
  • Multiple branch locations and ATMs for convenience (05:23).
  • Superior mobile and online banking, suitable for remote workers and digital nomads (05:45).

• Cons:

  • Higher fees and loan interest rates because they are for-profit (06:12).
  • Less personalized service; customers aren’t owners, just clients (06:40).

5. Insurance and Protections

• Credit Unions: Insured by the NCUA.
• Banks: Insured via FDIC.
• Both federally regulated; deposits are protected in case of institutional failure (07:00).

6. Decision-Making Considerations

• Key questions listeners should ask themselves: (07:45)
  • Do I need a branch location?
  • How important are online and mobile banking features?
  • Am I seeking high-yield accounts or lowest fees?
  • Does community ownership and support matter to me?

7. Summary and Encouragement

• Both banks and credit unions have strong points and drawbacks; the key is to research and align with personal priorities (08:12).

  • Quote:

    "Regardless, it's important that you do research before choosing any financial establishment to ensure that it fits your needs."
    (Daniella, 08:15)

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Host Commentary: Diania Merriam’s Perspective

• Diania shares her own habits and reasons for preferring online banks over credit unions (09:34).

  • She highlights convenience, fee-free usage, and robust customer service as priorities.

  • Uses Charles Schwab (checking and brokerage) and Capital One 360 (high-yield savings).

  • Rarely needs branch service or cash, values mobile banking.

  • Quote:

    "Mobile banking is incredibly important to me... In fact, the last time I tried to go to an ATM I realized that my debit card had been expired for six months."
    (Diania, 09:41)

  • Notes that credit unions still hold a minority of U.S. household savings and loans, likely due to limited services/convenience (10:14).

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Memorable Quotes & Timestamps

• "The biggest difference between a bank and a credit union is that banks are for profit institutions and credit unions are not for profit institutions.”
  (Daniella, 02:12)

• "Opening a business bank account for your side hustle at a credit union could save you a ton in fees down the line."
  (Daniella, 03:40)

• "If you like checking your balance online or transferring money from your phone, a bank could be a better option than a credit union."
  (Daniella, 05:49)

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Important Timestamps

• [01:01] – Introduction of topic: Credit Unions vs. Banks
• [02:02] – Core difference: Profit model of each institution
• [03:00 – 04:06] – Pros of Credit Unions
• [04:14 – 04:51] – Cons of Credit Unions
• [05:00 – 05:45] – Pros of Banks
• [06:12 – 06:48] – Cons of Banks
• [07:00] – Insurance: FDIC vs. NCUA
• [07:45] – Decision-making questions
• [08:12 – 08:15] – Takeaway: Do your research
• [09:34 – 10:18] – Diania’s personal experience and wrap-up

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Conclusion

This episode offers a clear, actionable comparison of banks and credit unions for optimal personal finance decision-making. Whether prioritizing personalized service, lowest fees, tech convenience, or community connection, listeners are encouraged to assess their own needs and do thorough research. Diania’s personal anecdotes ground the advice in real-world application, helping listeners navigate their financial choices with confidence.

Transcript

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This is Optimal Finance Daily Credit Unions vs. Banks by Daniella of iliketodabble.com Everyone needs a place to store their money. Make sure you choose a trusted financial institution when considering where to stash your cash. Either a credit union or a bank. But what's the difference between those two and which one is best for you? Could one be cheaper than the other for you in the long run? Does having a branch location matter to you? Do you care that your fees are going towards a community of members or for a bank to just make more money? Whether you're looking around for the first time or you're a seasoned veteran looking to open another account, you'll want to know the difference between a bank and a credit union before you make your decision. What is a credit union? A credit union is a trusted financial institution that's not for profit and run by their members. More than 118 million Americans hold $1.4 trillion in assets across 5,700 credit unions in America, according to a 2019 report from the Credit Union National Association. The average credit union is about half the size of the average bank. They're smaller and more personal because the members run and own the credit union. Credit Unions versus Banks how are banks and credit unions different? The biggest difference between a bank and a credit union is that banks are for profit institutions and credit unions are not for profit institutions. Banks focus on maximizing profit for their stockholders. A credit union is focused on giving their customers the best experience and gives their profits back through lower fees, better rates and other perks like free checking and savings accounts. Some credit unions have better high yield accounts in both their checking and saving account options, which make them usually more appealing than banks. But this does depend on the specific credit union. High yield savings accounts can pay you at least 500% more interest than normal banks, allowing you to make more money on the money you're saving, such as in your emergency fund. Pros of Credit Unions since credit unions are run by their members, they're committed to having excellent customer service. You'll get a more personalized experience since you're more than just a customer. Members have ownership of credit unions and can vote on different things. Not only are they committed to customer service, but they're committed to giving their customers the best financial offerings available. They offer lower interest rates and higher savings rates for banks, which is particularly great for small businesses. Opening a business bank account for your side hustle at a credit union could save you a ton in fees down the line. This is because they're not for profit institutions and and they give their profits back to their members. On top of that, many offer low or no fee accounts and services for their members. You'll definitely get more bang for your buck when you choose a credit union. Cons of Credit Unions however, credit unions don't only have upsides. They tend to be smaller than banks, which affects the financial products they can offer. If you're looking for something with robust financial offerings, you might want to consider using a bank as well as due to their smaller size, they have less branches open and they might be inconvenient for you to visit with any regularity. This is especially problematic since they might also not have the same user friendly technology as banks. When you choose to go with a credit union, you might be opting out of mobile banking and they might not have full service banking online. Depending on the size of your credit union. You also need to meet certain criteria when joining a credit union, so there's a possibility you might not be eligible to join the credit union. You have your heart set on pros of banks. Since banks tend to be larger than credit unions, they have a wider offering of services. You'll get full service banking, loan and retirement products. There won't be as many restrictions due to the size of the financial institution. If you're looking to create a one stop shop for all your financial needs, banks could be what you're looking for. They also have multiple locations open, which is more convenient for you as a patron since you'll be able to pop into the bank in more places in your city. You'll also have access to more ATMs around the area, which save you money on ATM fees. Online banks are particularly great for location independent side hustlers, remote workers, and entrepreneurs. Not only does their geographical positioning make them an excellent choice, but banks also have better online and mobile banking technology. If you like checking your balance online or transferring money from your phone, a bank could be a better option than a credit union. Cons of Banks While banks have plenty of benefits that draw customers to them, there are some downsides as well. Because banks are for profit institutions, they come with higher fees for their products. If you choose to take out a loan through a bank, you you might be subject to higher interest rates, and the checking and savings accounts at banks tend to come with higher fees as well. You're also potentially opting into less personalized customer service since you aren't a member of a bank but instead a customer. If you're looking for exquisite customer service and a financial institution willing to go above and beyond for you, then you might not want to choose a bank. FDIC vs NCUA the way that credit unions and banks are insured is also different and you'll want to make note of that before making your final decision. While they work similarly, it's important to know the difference between the two in case the financial institution should fail. Credit unions are insured by the NCUA and banks are insured through the fdic. However, they work fairly similarly. Both are regulated. You'll get paid out by the NCUA if your credit union should happen to fail, and by the FDIC if your bank should happen to fail. What to Keep in Mind There are a couple of things to think about as you're making your decision for which one to go with, so you make the best decision for your personal situation. Start by asking yourself these questions. Do I need a branch location? Do I need a certain amount of features available for an online banking option because I may be location independent? Am I saving on rates and fees and do I want a high yield account option like a high yield savings account? The Bottom Line Credit unions and banks are very similar financial institutions. 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[A]

I absolutely love the idea of credit unions and while my mortgage was sold to one, I don't do most of my banking there. Mobile banking is incredibly important to me. In fact, I haven't walked into a branch in probably 10 years and I have very little need for physical cash. In fact, the last time I tried to go to an atm I realized that my debit card had been expired for six months. That's how much I don't need cash. I personally have my checking account with Schwab. It has a brokerage account attached to it. I've never paid any fees. There were no foreign transaction fees when I traveled abroad for two months. And if I ever do need to go to an atm, they reimburse all the ATM fees. I also have a High Yield Savings account with Capital One360. This is where I stash my Emergency Opportunity Fund and I'm able to transfer money in and out with ease I've never paid any fees or have had any issues with customer service with either of these accounts. In fact, I think Schwab has the best customer service of any financial institution and I have experience with working with all the majors between my investments and credit card churning. Only about 10% of U.S. household savings are held in credit unions and only about 11% of non revolving consumer loans are issued by credit unions. I think the main reason is that they aren't able to offer the conveniences and services of a for profit bank. Well, that'll do it for another edition of Optimal Finance Daily. Thank you so much for joining today and every day and I'll see you again tomorrow where your optimal life awaits.