SMMC News & Events Blog

This blog highlights news, events, and informative articles on personal finance from University of Illinois System's Student Money Management Center. Feel free to navigate to different categories with the list of topics on the right or search for a specific topic next to the view all link below.

Choosing a Financial Institution: Bank or Credit Union?

Both banks and credit unions are financial institutions. They help keep money safe, provide financial services, and each institution can have strengths and weaknesses in meeting your financial needs.

Banks are for-profit institutions. They sometimes have more locations than a credit union and are often quicker to adopt and implement newer technologies. Legitimate banks should be insured by the Federal Deposit Insurance Corporation (FDIC). If they are not, avoid banking with them.

Credit unions are member owned, non-profit institutions. They often pay higher interest on depsoits and offer lower interest rates on loans. However, they are often slower to adopt and implement newer technologies and may have fewer locations. Legitimate credit unions are often insured by the National Credit Union Association NCUA.

Online banks and credit unions are great options to consider. Do not think you are required to find a financial institution near campus unless the in-person services provided by a financial institution are something you want to be able to take advantage of.

Asking Questions about Services

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Here are a list of questions that might be helpful when comparing financial institutions:

• Are ATMs available near your location?
• Are the locations convenient?
• Does the institution have an online presence only or physical location?
• Do they offer mobile banking? What is the quality of mobile banking services?
• What are the cost of services?
• Do you earn interest on savings accounts?
• What are the minimum balance requirements?
• Does the financial institution offer lending services (e.g., credit cards, personal loans, auto loans, etc.)?
• Are checking and savings accounts insured by the FDIC or NCUA?

Opening a Bank Account

To open a bank account with most financial institutions, you will need to:

1. Decide on services and/or products you want (e.g., checking and/or savings accounts, Money Market, Certificates of Deposit, or loans). 
2. Select the financial institution that has those services or products: bank or credit union.
3. Remember that processes vary by institution and services being sought after.
4. Generally, you will need:
   • Social Security Number or Individual Tax ID Number (which some institutions will help you get if you don't have an SSN)
   • Evidence of physical and mailing addresses
   • Government-issued ID (e.g., driver's license, passport)
   • An initial deposit (and minimum deposit amounts vary by institution)

Please note: Even though the University has a banking partnership, it does not mean you are required to use the same bank. Consider what services work best for your needs before deciding where to open a bank account. 

Learn More

Listen to our Making Cents of Money episode, Banked or Unbanked - Choosing Financial Services for You, to learn more about banking and protections consumers have when choosing a financial institution.