With the current focus on financial institutions, it is important to understand the fundamental differences between credit unions and banks. Below are a few points explaining the principles credit unions are founded on.
Credit Unions are financial cooperatives owned by members rather than shareholders.
Banks have customers; credit unions have members. Corporate decisions at credit unions are based on the cooperative ownership of its members rather than keeping only shareholders happy.
Profits are returned to members through higher savings rates and lower loan rates.
Rather than returning profits to shareholders like banks, credit unions return profits to its membership base through higher savings rates, lower loan rates, and lower fees.
Credit Unions are run by a volunteer, rather than paid, board of directors.
The board of directors for credit unions are all members of the credit union and are unpaid volunteers.
Because they are not publicly traded, credit unions do not rely on the stock market.
Credit unions are non-profit, and their stability is not reliant on the stock market.
Credit Unions have sound lending practices and service oriented policies.
Because of these differences, credit unions are member focused, not profit focused.
Thinking about transferring your account to a credit union, check out our switch kit.
Credit union funds are insured by the National Credit Union Administration and National Credit Union Share Insurance Fund.