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.

CREDIT UNIONS MEMBER OWNED	BANKS PUBLICLY OWNED
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