After my husband graduated from College he was offered a job at the local credit union in Massachusettes where we were living
. He quickly became a big supporter and we had to transfer all our money. That wasn't much of a transfer as we were newly graduated students, probably all of a five hundred dollars if we were really lucky.
Through the years it seems like my friends who are business owners choose to use banks, those of us who are employees seem to choose credit union. Banks are for businesses, credit union for the little guy who doesn't want to spend a fortune in fees or penalties. My husband like to tell us how credit unions take care of there members. This has been true through the years as we have taken out auto, home equity or student loans. Never a penalty for early payment.
Credit unions have morphed through the years, it used to be that you had to belong to a very specific organization in order to belong, lots of legal battles have ensued between banks and credit unions, especially here in Massachusetts where the banks have been under attack during these hard economic times.
The biggest difference between credit unions and banks is that banks are for profits and credit unions are not-for-profits. Credit unions don't have share holders they have members. Banks use the large fees collected to pay the share holders. While members of credit unions don't get year end dividends they usually get paid back in the form of lower interest rates and lower fees.
Credit unions are not insured by FDIC but they are insured by NCUA which will also protect your money in the case of a problem. My husband is now Massachusetts leading cheerleader for credit unions and would never let us go back even if we wanted to. Out of old habit, I still call our credit union the bank as in' "I need to go to the bank today". He is forever correcting my slight of speech. Banks versus Credit Unions, for our house we will continue to patronize the Credit Unions.