Credit Union vs Bank

Following are some of the main differences between a Credit Union and a Bank:


Credit UnionBank
Type of Organization Credit Unions are NOT-for-profit financial cooperatives that only exist to serve the financial needs of their member-owners. Banks are FOR-profit institutions that exist to generate profits for stockholders.
Who Can Join Credit Unions serve a common “field of membership” based on things such as: people in a particular community or geographic area, employee groups or members of a particular organization or association. The "field of membership" is determined by a state and/or federal regulator. STAR members often describe feeling a stronger connection and loyalty to the Credit Union because of a shared sense of community with their fellow members. Anyone
Who Owns It The members of the Credit Union own their Credit Union. A Credit Union is a democratic, member-owned and governed cooperative in which members have the power to direct Credit Union policy. If the majority of members are dissatisfied with the directors who set the policies of their Credit Union, they have the power to replace them. Credit union elections are based on a one-member, one-vote structure, and only members can be on the Board of Directors. Who knows? Board members and stockholders in a Bank are not required to be members of that Bank, and voting rights depend on the number of shares individuals own. In addition, members of the board and stockholders are not required to use the institution’s products or services.
Board of Directors Volunteer, unpaid members Shareholders (paid)
Income Comes From Earnings come from interest from loans and non-interest income. Profits come from many different kinds of banking fees, interest from loans, business accounts and investments.
Income Goes To Credit Union's earnings are returned to members in the form of lower loan rates and higher savings rates, as well as contributions to offset fees and to expand services, such as additional branches and ATMs. As a result, Credit Unions are able to offer tremendous value on products and services. Banks issue stock or pay dividends to outside stockholders.
Interactions with Like Financial Institutions The cooperative spirit of a Credit Union extends to members and also to other Credit Unions, which help one another through shared information and ideas. If Credit Unions merge, it is to benefit the members, not to acquire more profits. Banks often merge in an attempt to increase profits from services and improve dividends to stockholders.
Deposits Insured By The National Credit Union Share Insurance Fund (NCUSIF) is administered by the National Credit Union Administration (NCUA), an agency of the federal government. Deposits up to $250,000 per account and up to $250,000 for IRAs are insured. The NCUSIF has had the strongest equity-to-insured risk ratio over the last decade of federal deposit insurance funds. Not one penny of any insured savings has ever been lost by a member of a federally insured Credit Union. Federal Deposit Insurance Corporation (FDIC)


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