Skip to Content
Tally logo

Bank Savings Accounts vs. Credit Union Savings Accounts

If you’re trying to determine the best place to store extra cash, it’s important to understand the differences between traditional bank savings accounts and credit union savings accounts.

Chris Scott

Contributing Writer at Tally

July 12, 2022

Since they’re an easy place to stockpile some cash without much risk, a savings account can help you reach your financial goals or plan for an emergency. 

When exploring savings accounts, you’ll find dozens — if not hundreds — of different options available.

Start by determining whether a credit union savings account or regular savings account from a bank is right for you. Below, we’ll delve into the differences between these two savings accounts to help determine which best suits your financial situation.

What is a savings account?

A savings account is a type of account where you can store money without much risk. 

Savings accounts aren’t subject to fluctuations in the stock market, and you'll earn interest based on the interest rate offered by your financial institution. The interest rate on a savings account is often referred to as the annual percentage yield, or APY.

Savings accounts are similar to checking accounts. However, savings accounts typically have higher interest yields than checking accounts. This is doubly true if you use a high-yield savings account.

That said, accessibility to your savings account may be more restricted than your checking account. For example, there may be a limit on the number of ATM withdrawals permitted monthly from a savings account. On the other hand, your money is more liquid and accessible than it would be if you put it in a certificate of deposit (CD) or a traditional/Roth individual retirement account (IRA).

Nearly 60% of Americans have less than $5,000 in savings. There are differences between regular bank savings accounts and credit union savings accounts, but you can’t go wrong with either. The fact that you’re looking to become a saver means you’ve started on the path to financial freedom.

What is a credit union savings account?

A credit union savings account is an account where you can store money. Credit unions are financial institutions similar to banks, but a credit union is a member-owned cooperative that functions as a nonprofit organization.

A credit union’s focus on members over profits could make them an attractive option to store your savings, as we’ll detail more below.

What is a bank savings account?

A bank savings account is similar to a credit union savings account. Like a credit union savings account, a regular bank savings account safely stores your money. If you open a checking account with a bank, many brick-and-mortar institutions also automatically open a savings account in your name. 

What are the differences between bank and credit union savings accounts?

When comparing credit accounts between banks and credit unions, there are a few differences to be aware of:

Banks and credit unions are structured differently 

As mentioned previously, credit unions are nonprofit, member-owned organizations. Banks are for-profit businesses owned by private individuals and stockholders. Credit unions may require you to become a member and pay monthly fees to open and maintain an account. 

Membership approval may be based on certain criteria, such as military service or if you work in a particular industry. Banks are more apt to accept anyone who has funds to deposit.

Banks and credit unions are offered in different areas

 You’ll find that credit unions are typically concentrated in specific geographic areas. Though this can be the case with banks, many banks operate nationally.

Banks may be more accessible

Because of their larger reach, banks may be more accessible than credit unions. If you need to withdraw cash while traveling, you’re more likely to find an ATM affiliated with your bank than your credit union. 

However, some credit unions may waive ATM fees if you withdraw cash from another financial institution. 

Lastly, banks are more likely than credit unions to offer features like online banking, mobile apps and mobile deposit.

Banks and credit unions are insured differently 

Most banks and credit unions are federally insured, meaning customers are protected up to $250,000 in case of bank or credit union failure. 

However, the two organizations are insured differently. Banks should be insured by the Federal Deposit Insurance Corporation (FDIC), while credit unions should be insured by the National Credit Union Administration (NCUA).

Now that you better understand the primary differences between regular savings accounts and credit union savings accounts, let’s take a look at why each option would be a better fit for your financial situation.

What are the advantages of credit union savings accounts?

There are advantages to both credit union savings accounts and regular savings accounts. Let’s take a closer look at the advantages of each.

Credit union savings accounts may have benefits to help you reach your financial goals. Below is a list of some of the most attractive features of credit union savings accounts.

Higher interest rates

If you’re most concerned about maximizing savings rate, you may want to focus on credit unions. Credit unions tend to offer higher interest rates than banks. 

However, be sure to look closely at APY before opening an account. Some online banks without brick-and-mortar locations offer high-yield savings accounts and money market accounts with higher interest rates than credit unions.

Lower fees 

You may need to pay a membership fee to join a credit union, and you should also expect to pay monthly maintenance fees. These fees can be as little as $3. Overall, credit unions typically have lower fees than banks for ATM fees, overdraft fees and service charges.

Personalized service

Because credit unions are member-owned and often serve local communities, you’re more likely to receive personalized service.


Lower interest rates on loans

If you need a loan, you may find credit unions offer lower interest rates. This could be for something like a personal loan or auto loan. If you’re already a credit union member, you’ll potentially have access to the lowest interest rates for loans.

Lower minimum balance requirements 

This can vary from institution to institution, but credit unions may not have strict requirements pertaining to minimum balances. They may also have lower opening deposit requirements as well.

What are the advantages of regular savings accounts at a bank?

A credit union savings account may be an attractive option, but there are still some things to like about traditional savings accounts.  Let’s compare this to some of the advantages that a bank’s basic savings account offers.

Broader access 

Many banks have a nationwide presence, which means you may have more access to your money. Depending on your lifestyle, this could be advantageous. Additionally, banks offer features like mobile banking that make accessing your money on the go easier.

More options to choose from

Access to credit unions in your area may be limited. Banks are more common than credit unions, which means you may have more options to choose from. 

No membership fee

Banks aren’t as likely as credit unions to charge membership fees, which could save you a bit of money in the long run. 

In summary, if you need frequent access to your money or are attracted to features like mobile banking, then a regular savings account may be a better option.

Start saving money and improve your financial situation

When selecting a savings option, consider starting your search by deciding between a traditional bank account and a credit union savings account. 

There are advantages and disadvantages to both. Credit union savings accounts, for instance, may come with higher interest rate yields, but you may need to pay a membership fee while being faced with limited accessibility.

Perhaps the most important thing to remember is that you can’t go wrong with either option. By researching different account options, setting savings goals and setting money aside for future large purchases or emergencies, you are putting yourself in a strong position for financial success.

If you’re looking for more ways to help improve your financial situation, sign up for Tally’s† newsletter. This newsletter provides the latest financial news, information, and tips straight to your inbox.

To get the benefits of a Tally line of credit, you must qualify for and accept a Tally line of credit. The APR (which is the same as your interest rate) will be between 7.90% and 29.99% per year and will be based on your credit history. The APR will vary with the market based on the Prime Rate. Annual fees range from $0 - $300.