What is a Credit Union?

A credit union is a not-for-profit financial institution that is owned and operated by its members. Credit unions provide a variety of financial services, similar to traditional banks, but they operate under a cooperative structure with a focus on serving the financial needs of their members. Here are key features and functions of credit unions:

• Membership and Ownership: Credit unions are owned and governed by their members. To become a member, individuals typically need to meet certain eligibility criteria, such as living in a specific community, working for a particular employer, or belonging to a certain organization. Each member typically has an equal vote in decision-making processes, regardless of the amount of money they have on deposit.
• Not-for-Profit Structure: Credit unions operate on a not-for-profit basis, which means their primary goal is to serve their members rather than generate profits for shareholders. Any surplus earnings are often returned to members in the form of dividends, lower interest rates on loans, or enhanced services.
• Membership Requirements: Credit unions often have a common bond that unites their members, such as a shared employer, community, or association. This common bond creates a sense of community among credit union members.
• Deposit Accounts: Credit unions offer various deposit accounts, including savings accounts, checking accounts, certificates of deposit (CDs), and other savings products. Members can deposit money, earn interest, and access their funds as needed.
• Loans and Credit:Credit unions provide loans to their members, including personal loans, auto loans, mortgages, and credit cards. Interest rates on loans and credit cards offered by credit unions may be competitive, and credit unions often prioritize affordable lending to their members.

Banks and credit unions are financial institutions that offer a range of financial services, but they differ in their structures, ownership, and purposes. While both banks and credit unions provide financial services, their ownership structures, purposes, membership requirements, profit motives, and regulatory frameworks differ. Choosing between a bank and a credit union often depends on individual preferences, financial needs, and the specific services offered by each institution.