In Ethiopia, among other things, lack of adequate financial service is considered as the basic constraint to improve welfare of households. Collateral based commercial bank’s financial service restricted low income households not to get loans. Providing financial services through SACCOs and MFIs to low income households has been proposed as a tool for economic development and for improving welfare. In Ethiopia, irrespective of their relative age, urban SACCOs, especially employee based SACCOs are areas that have hardly been treated by researchers. The main purpose of this study is to investigate the impact of employee based SACCOs’ financial service relative to MFIs on welfare of employee households in Injibara town. The objectives of this study are to analyze thedeterminants of membership and to quantify the impact of SACCOs on member households’ welfare. The study was conducted in Injibara town. Five SACCOs satisfying the criteria and two ACSI branches were selected to study. The study adopted quasi-experimental design. Quantitative data collected through questionnaire were used to this study. Data were then analyzed using quantitative data analysis methods, such as descriptive and inferential methods. The statistical package used to data analysis was STATA software version 14. The empirical findings indicate that sex, education level and family size determine the decision of an employee to join SACCO or not. The study also confirms that, employee based SACCO participation improves household welfare. Employee based SACCO membership has made positive impact on household total consumption expenditure and food expenditure. It is recommended that the government should give special attention for establishment, organization and promotion of cooperatives; and promote education. The cooperative promotion agency, on behalf of the government, and SACCOs’ management body, together, should work hard in awareness creation of female employees to join SACCO. In addition to this, to improve welfare of households in the study area, the MFI authorities should design a system that can promote female employees to become client in particular and design technology based service delivery system which reduces the interest rate to be charged in general.