Credit Unions vs. Banks

Credit unions were established to help people, not to make a profit.  The credit union movement began with a simple idea, that people could achieve a better standard of living for themselves and others by pooling their savings and making loans to neighbors and co-workers.  Here are some key differences between a credit union and a bank.





Serve only members Serves 2 groups:  stockholders and customers
Not for profit In the business to make a profit
Focus solely on serving their members Banks can serve anyone in the general public
As a not-for-profit, any income is returned to the members in the form of low or no service fees, lower rates on loans and higher deposit rates Only investors get a share of any profits
Members elect a volunteer Board of Directors to represent their interests Board of Directors are paid to represent the investors
Each member is an equal owner and has voting rights Only investors have voting rights, customers have no voting rights and no authority in the governance of the bank
Deposits are federally insured by the National Credit Union Administration (NCUA) to at least $250,000 Deposits are federally insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000
Exempt from federal and state income tax, credit unions do pay property taxes As a for profit business, banks must pay taxes to the government
Financial cooperative, members pool their savings to provide low-cost loans and low-fee services to each other Commercial business, banks offer services to make a profit