What is the difference between a Bank and a Credit Union?
There are a few different lenders out there, these are generally considered banks or non-bank lenders. Banks, credit unions and building societies are usually the lenders you will hear about the most.
It is important to understand the difference between a bank and a credit union or building society as it will help make your decision when choosing the lender that is right for you.
What is a Bank?
In Australia we have 4 major banks, Commonwealth Bank, ANZ, Westpac and National Australia Bank. There are a number of smaller banks operating in Australia as well. The ‘big 4’ are publicly listed companies, they have shareholders and have an obligation to their shareholders to maximise profits.
What is a Credit Union and Building society?
Credit Unions and Building Societies are customer/member owned financial institutions. They are generally community oriented and non-profit institutions. Credit unions can often offer lower rates as they do not have an obligation to their shareholders to maximise profits.
Regulation of Banks, Credit Unions and Building Societies
You may find yourself asking ‘is a credit union or building society as safe as a bank?’ Simply, yes they are. In Australia Credit Unions and Building Societies are regulated in the same way as the Banks.
The Banks and Credit Unions are regulated by the Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investment Commission (ASIC).
What does this mean for the consumer?
There are benefits and disadvantages to both Banks and Credit Unions or Building Societies. While Banks are generally bigger and offer more access to branch networks, ATM’s and excellent Phone & Internet Banking platforms they may not offer the lowest rate. This isn’t always the case and rates can be negotiated through your broker. Credit Unions and Building Societies, while smaller, are usually very customer focused and able to offer very competitive interest rates along with a suite of other products to help meet your financial needs.
Choosing between a Bank and a Credit Union is very personal and can simply come down to convenience or the best deal at the time.
Please contact me on 0447277321 or email email@example.com to discuss your options and to see if you’ve got the best deal possible.