Depository Institutions

Commercial Banks vs. Credit Unions

The following page is going to compare and contrast Commercial Banks and Credit Unions, allowing us to see the unique elements of each.

Commercial Banks


  • For-profit
  • Open to anyone who would like to utilize depository institutions
  • Offers many services
  • Typically the largest depository institutions

Credit Unions


  • Not-for-profit, these institutions are owned by the members
  • Have membership qualifications (must be a part of a "common bond")
  • Offers many services, but typically not as many as Commercial Banks
  • Offer higher interest rates and lower fees

Commercial Banks and Credit Unions

Services offered:

  • Security (safes, secure networks, etc.)
  • Insurance (both kinds offer insurance for up to $250,000 per depositor, per account)
  • Services, such as: credit, financial advice, safety deposit boxes, special needs payment instruments, transaction and savings tools, and more.
  • Savings and Checking Accounts
  • Debit Cards
  • ATMs

What are these terms?


Credit essentially means borrowing money from the bank, in exchange for a promise to repay this amount (plus interest). Credit can be given through loans for education, buying a home, or an automobile. Credit can also be given through credit cards, which can be used on everyday items. You must always apply for credit, and the Institution will determine if they believe you will be able to pay back the credit, and the size of the loan you will be elligable for. The institution will also determine the amount you have to repay, and the price you have to pay for the loan (which is paid as Interest). By agreeing to this, you are promising to repay the amount you borrowed, and the interest.

Financial Advice

Financial advice is exactly what it sounds like. Financial institutions offer assistance, information, and advice to many different financial related topics such as investments and estate planning.

Safety Deposit Boxes

This is again, exactly what it sounds like. Almost all Depository Institutions have a secured boxes that you can use to store valuable personal items. These can be used to store important documents such as Social Security cards, wills and birth certificates.

Special Needs Payment Instruments

Most institutions offer these special payment methods, such as Traveler's checks, Cashier's checks, certified checks, and money orders.

Transaction and Savings Tools

These are used mainly to help you manage your money, without having to handle cash. These acounts are offered mainly to help people manage their finances more effectively.


Interest is the price paid for someone elses money. By placing your money in a savings account that earns interest, you are essentially allowing the bank to 'borrow' your money and someone else to use it. You will then earn Interest for allowing the bank to 'use' your moeny. Other times, in the instance of taking out a loan, you will be the one paying the interest.

Savings Account

This is the most common bank account. These are usually used to store money that you don't intend to use on daily expenses. The money stores in your savings account will earn interest and be stored in a secure location.

Checking Account

This type of account allows you quick and easy access to your money and it is most popular among consumers. You can transfer money to a different account, including another persons, through the form of paper checks, credit cards, or withdrawing cash.

Debit Cards

Debit cards are electronically connected directly to the card holder's checking account. These allow the consumer to have easy access to their funds, either at the point of sale, or at an ATM. Debit Cards function in the same way as a check, but are more easily transportable, and quicker, as they are electronic. They typically require either a PIN (personal identification number) or a signature, to authorize the user to perform any transactions.


ATMs, or Automatic Teller Machines, allow individuals to perform certain transactions from a machine, without the assistance of a teller. These can be accessed using an ATM card and a PIN. The typical actions on an ATM are deposits, withdrawls, account transfers, and viewing account balances. The number and location of ATMs will vary, depending on the Depository Institution, but others can be used for a fee.