Ask the average person where they conduct all their checking account and debit card transactions, and most will probably say a bank. Even though there are more than 114 million members of credit unions in the United States, according to the Credit Union National Association, some may still not have heard of the financial institution model. However, there are some important distinctions that are worth noting.

Credit unions tend to charge lower or no fees on their products and services. These include checking accounts, ATM transactions, and overdraft protection. Compared to banks, the financial institutions generally don't require minimum daily balances to avoid penalties. When it comes to savings accounts and Certificates, credit unions also typically offer more competitive interest rates.

One of the key differences between credit unions and banks is eligibility requirements. Banks don't have any restrictions on who can become a customer. Credit unions have laws in place that restrict membership to specific groups. These run the gamut from entire communities to members of the military, teachers, and even actors. Family members of these groups are also eligible to join. Today, some credit unions have expanded their membership to include more geographic regions. Once you join, you become a lifelong member.

Credit unions are not-for-profit institutions, unlike banks, which operate on a for-profit structure. Members of the credit union actually have an ownership stake that allows them to vote on issues concerning products, services, and more. A small group of shareholders decides the fate of banks. Another important operating distinction is credit unions’ members receive their share of dividend payments each year, whereas bank customers do not.