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Are you seeing your money pile up in a checking account? While it feels good to have all that cash on hand, your money isn't really working for you when left in a low-interest checking account. That's where savings accounts come in to help you safely save while earning serious interest on your money.
But when it comes to choosing a savings account, you have two options—a credit union savings account or a bank savings account. Choosing between these two options can have a significant impact on how your money grows and how easily you can access it. The decision is about more than just where to park your money—it's about maximizing interest earnings, minimizing fees, and making sure your financial needs are met with the right balance of convenience and service. Let's look at the primary differences between credit union and bank savings accounts so you can make an informed decision about where to save your hard-earned money.
When it comes to interest rates, credit unions typically have the edge over banks. This is because credit unions are not-for-profit organizations that are owned by their members rather than shareholders. As a result, they can offer higher interest rates on savings accounts since they do not have to generate profits for shareholders. For example, Alliant's high-yield savings account offers interest rates well above the bank industry average.
Banks, on the other hand, are for-profit institutions that aim to make money for their shareholders. This means their priority lies in maximizing profits, which often results in lower interest rates on savings accounts.
It is also worth taking time to look at the interest rates at online financial institutions, which typically offer higher interest rates due to lower overhead costs. Alliant Credit Union is both 100% digital and not-for-profit, so you can earn more on your money with our high-rate savings account (and Alliant offers interest on their checking account, too).
One of the standout advantages of credit unions is their generally lower fee structure. Credit unions typically charge little to no monthly maintenance fees, making it easier to save without worrying about unnecessary expenses. Additionally, they often set lower minimum balance requirements, making it accessible for members to maintain an account with smaller amounts. Overdraft fees and ATM fees at credit unions are also typically more affordable, helping you keep more of your money. For example, since 2021, Alliant has eliminated overdraft fees65 on both checking and savings accounts.
In contrast, banks—especially larger national banks—tend to impose higher fees across the board. Monthly maintenance charges can be steep, and many banks require a higher minimum balance to avoid these charges. Overdraft fees and out-of-network ATM fees are also common at banks, potentially adding up quickly if you’re not careful. Similar to interest rates, online financial institutions may offer lower fees in comparison to traditional brick-and-mortar banks.
For those looking to minimize their costs, credit unions and online banks usually present a more budget-friendly option.
Access to funds is one area where banks can sometimes have the upper hand, particularly large national institutions. While both types of financial institutions allow for in-person transactions at branches, large banks tend to have a wider network of ATMs, making it easier to access cash without being charged any additional fees.
Credit unions and online banks, on the other hand, may have a more limited ATM network or may only offer free access to ATMs within a limited network. However, certain credit unions participate in shared branching networks which allow members to use ATMs from numerous other participating credit unions for free.
For example, with the Alliant Visa® contactless debit card, you can gain access to more than 80,000 fee free ATMs59 nationwide. Alliant also provides a rebate of up to $20 per month if you use an out-of-network ATM, helping you offset fees even if you’re not near an in-network ATM.
Technology and online banking have revolutionized the way we handle our finances. Some smaller traditional banks may offer online banking services but are often limited in functionality and can be cumbersome to use. On the other hand, online financial institutions often provide a seamless and user-friendly experience with advanced technology that allows for easier management of accounts and transactions.
These financial institutions also tend to offer innovative features such as mobile check deposit, bill pay and tracking tools to see how much interest you are earning and where your money is going. These features not only make banking more convenient but also help users stay on top of their finances.
Credit unions have also embraced technology and enhanced convenience. While not all credit unions offer the same level of technology, many have adapted to meet the needs and preferences of their members and developed their own mobile apps. Alliant's award-winning mobile app, for instance, allows members to deposit checks, check account balances and interest earnings, transfer funds and search for in-network ATMs.
This is one area where banks and credit unions are generally on equal footing. Most institutions are either insured by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA). Both agencies protect depositors' money up to $250,000 per account. This insurance provides peace of mind and protection for your hard-earned money.
In addition to insurance, most banks and credit unions have strict security measures in place to protect your information and accounts. These measures include encryption technology and multi-factor authentication for online transactions as well as fraud detection and prevention systems.
When it comes to customer service, credit unions excel in providing a more personalized experience. Credit unions are known for their member-centric approach, offering financial advice that is tailored to individual needs. This focus on the community is a core part of their mission, as decisions are made with the well-being of members in mind.
The right savings account for you depends on your personal needs, preferences and financial priorities. When considering your options, think about what matters most to you. Is it finding the absolute highest interest rate to grow your savings? Striking a balance between accessibility and personal attention? Or, perhaps, utilizing advanced online banking features and technology?
Answering these questions will help guide you toward the right choice for your savings and ensure that you select a financial institution that aligns with your values and objectives.
with award-winning saving rates and loans
with an Alliant high-rate saving account
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