Credit Union vs. Bank: What college students need to know before opening a bank account

TROY, Ala. (TROJANVISION) — College is where some people start their solo financial journey, but do college students know the fundamentals that go into placing their money in a financial institution?

For instance, do students truly know the difference between a bank and a credit union?

“Banks are for-profit organizations like your typical business would be or somebody who goes out and starts a business,” said Associate Professor of Economics John Dove. “It’ll be for-profit. Credit unions are a non-profit and only open to ownership through those individuals that are members.”

According to Dove, there are not a lot of differences between banks and credit unions. However, there are differences that people may need to think about before making the final decision on a financial institution.

“Typically, credit unions will offer slightly lower fees or slightly higher interest rates because they are not for profit,” Dove explained. “Banks are going to be competitive with one another across rates. They’re all going to be regulated under the same regulatory apparatus and they’re pretty much all going to be FDIC insured up to 250 thousand dollars. As far as students should be concerned, unless they’re really coming up on that $250,000 limit, it’s really any any bank single bank should be fine.”

Dove urged college students to be mindful of their financial decisions now in order to have a good financial future.

“Recognizing that decisions that you make now really will have big ramifications and repercussions, even a couple years down the road, so be financially sound. Be careful with your money.”

For more information, contact Troy University’s Student Advocates for Basic Needs, which helps students looking for financial literacy assistance.