Benefits of Credit Unions - How are They Different?
Credit unions are member owned, not-for-profit cooperatives. They exist to serve the needs of their members and offer the same types of products and services you would find at a bank. All credit unions and banks have one thing in common: they use the deposit balances of their members/customers to make loans.
Member vs. Customer
- At Credit Unions, each member is an owner of the credit union. Regardless of how much money they have on deposit, each member has one vote in electing board members.
- Bank’s customers have no ownership interest in their bank and are not able to elect their board members.
Not-For-Profit vs. For Profit
- Being not-for-profit, credit unions’ earnings are paid back to members; they receive higher savings rates and lower loan rates.
- Banks, being for-profit corporations, earnings are paid to stockholders.
- Credit unions’ board members are comprised of volunteers, they are members of the credit union, and are elected by the membership.
- Banks’ board members are paid, may not be a customer of the bank, and are elected by stockholders.