Online banks vs. traditional banks vs. credit unions

profile Erin Bruehl  |  October 6, 2021

Who should you trust with your hard-earned money? Three options are available to you: online banks, traditional banks, and credit unions.

Online banks are digital institutions with no physical branch available. They offer many of the trappings of banks and credit unions, including checking accounts and free ATMs, but all of your interactions happen online.

Traditional banks are brick-and-mortar institutions that have several available branches. If you've ever opened an account with a company like Bank of America or U.S. Bank, you've worked with a traditional bank.

Credit unions are also brick-and-mortar institutions, but they tend to be smaller organizations. They're often limited to one city or geographic area, and they tend to serve a clientele that has something in common. If you've ever opened an account with the Navy Federal Credit Union or the Boeing Employees Credit Union, you've dealt with an institution like this.

Comparing a credit union vs. an online bank vs. a traditional bank involves an examination of what's most important to you as a financial consumer. Let's explore a few different types of people and help you decide where you fit in.

You can’t get to a bank in business hours: Online Bank

Do you work the nightshift? Or are you tied to your desk all day with no breaks for personal errands? Do you work multiple jobs and have little free time? If you can't head into a traditional bank or credit union during open hours, an online bank may be a better choice.

Online banks are open when you need us. Our digital tools make it easy for you to complete most transactions with your phone, on your time, at your pace.

If you run into problems, we're here to help resolve them. But we'll never expect you to modify your schedule to meet our needs. We're here when you're ready. We’re available via our live chat 24/7, 365 days a year.

Plenty of consumers can't keep bankers’ hours. If you're one of them, an online bank could be an exceptional choice.

You Want Your Money Faster: Online Bank

Online banks can often get you your money faster than traditional banks. At Current, you get paid up to 2 days faster with direct deposit if you’re a Premium Account member.

When you have faster access to your funds, you can avoid paying bills late. And this can keep you from accumulating debt.

We also offer overdraft up to $100 without fees so you don’t have to worry about overdraft fees depleting your balance. And we have no hidden fees. You can spend your money on what you want, rather than fees.

ATM Locations Matter to You: Tossup

Do you like to have cash on hand for emergencies? Are you wary of driving miles and miles to find the right cash machine? In the past, traditional banks had a lock on ATM locations. Since these organizations were so big, they had the most machines available. That is changing.

Follow an expert's advice, and you'll choose a group with ATMs close to your home and work. But many credit unions and online banks have partnerships with stores and other vendors. Your next cash machine visit could happen at a convenience store near you with no extra charge.

Don't assume that the largest institution with the most extensive in-person presence can serve you best. Always ask where you can withdraw money before you decide. At Current, we offer members the ability to withdraw cash at 40,000 fee-free Allpoint ATMs with a map right in our app to show all the locations near you.

Your Phone Is Always With You: Online Bank

Do you know where your phone is at all times? Would you rather send a quick text than make an appointment for an in-person visit? If you're digitally savvy and prefer to control your life from your device, an online bank is just right for you.

Banking apps like ours were made with digital consumers in mind. Our online tools aren't add-ons, like those developed by traditional banks. They are the primary method we use to serve our customers, and we take them very seriously. This means our whole focus is on making your mobile banking experience as easy and pleasant as possible.

We upgrade our tools often, and we ensure that everything you want to do at a bank you can do from your phone. You don’t ever need anything else.

If you're comfortable with managing your money from the device in your palm, online banking could be just right for you.

You're Motivated by Community Pride: Credit Union

Do you support local schools, charities, or fundraisers? Would you like your financial partner to do the same? A credit union could be a great choice for you.

Credit unions are often owned and operated by people who live in your community, and they often give back generously. One credit union, for example, has generated $75 million for children's hospitals since 1986.

Talk with your organization before you sign on and ensure that the group gives to organizations you know and trust. Ask for records of past contributions just to keep track of promises they make and those they have kept.

But if giving back to the community is your overriding concern, a credit union could be a clear winner.

Saving Money Is Your Top Concern: Credit Union or Online Bank

Do you worry over every dime you spend in fees? Do you examine interest rates carefully? If you want your money to work harder for you, a credit union or online bank could be a great choice.

When compared to traditional banks, credit unions often offer higher interest rates and lower fees. Open up a savings account in both institutions, and you might see a small bump in the credit union version in time.

But online banks can also offer extremely competitive terms. Companies like ours have no hidden or overdraft fees so we can put more money in our customers’ pockets. And since we don't need to maintain an extensive network of bank branches, we can pass that savings on to you.

You Travel, Including Overseas Trips: Traditional Bank

Does your job involve zipping from state to state or even country to country? Do you save your money to head out on backpacking trips in exotic locations? If you're always on the move, a traditional bank could be a good choice.

Travel can trigger the unexpected. You may face expenses you weren't ready for, and you might need an in-person conversation to straighten things out. Foreign travel can also lead to money exchange concerns, and you might need a bank's help with that too.

Experts also say withdrawing money can be tough when you're overseas, and traditional banks tend to solve these issues quickly.

If your future involves extensive travel, a traditional bank could be a good financial partner for you. If you don’t travel frequently, you might consider another banking option that offers more convenience.

You’re Interested in Other Financial Products: Traditional Bank

Are you hoping to stash money away in a Roth IRA so you're prepared for retirement? Do you want to explore other investment opportunities? A traditional bank may help.

Credit unions can offer limited services, such as loans and checking accounts. But they may not have staff available to help you understand how to invest in the stock market. Some online banks are the same. They can help you manage everyday money, but they're not built to offer more extensive financial advice.

You may not be ready to even think about these savings options right now. If you decide to look into them later, you can always do so. But if you're ready to take the leap now and you want the same partner managing those accounts that handles your everyday money, a traditional bank may be a good choice.

If you aren’t looking for extraneous accounts, online banking might be a more straightforward option for you.

You Want People to Know Your Name: Credit Union

For most of us, money is personal. We want to know that the companies we're working with both understand us as individuals and respect us as adults. For some people, that involves name recognition. If you're someone who feels aglow when someone recognizes your face, a credit union could be a great choice.

Credit unions often have very small staffs, and since they're brick-and-mortar institutions, you'll do most of your work in person. If you have a lot of transactions, you may walk into and out of the facility quite a bit.

For credit unions, building up a relationship with members is critical. The staff is expected to know who you are and what you like to be called. If this is important to you, a credit union is a great choice.

If you don’t need in-person interaction, you might enjoy online banking. Some online banks have robust member communities.

The Choice Is Clear

We've talked quite a bit about the benefits of an online bank vs. a credit union or traditional bank. Now, we'd like to tell you a bit about why we believe Current is the best choice for you.

Download our app and sign up in just two minutes.


Top 10 Reasons to Choose a Credit Union Over a Bank From Co-Op Financial Services. (July 2010). BusinessWire.

The Pros and Cons of a Credit Union Versus a Bank. (March 2019). U.S. News and World Report.

Credit Union vs. Bank: Which Is Right for You? Ramsey.

Top 10 Reasons People Love Credit Unions. (October 2016). Experian.

Don't Choose a New Bank Without Checking Out These 7 Things. (June 2020). Next Advisor.
6 Pros and Cons of Traditional Banks. (July 2016). Las Vegas Review Journal.

Current is a financial technology company, not a bank. Banking services provided by Choice Financial Group, Member FDIC.

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