Credit Unions vs Banks

[thartley]

I'm not really sure how many of you have ever thought about where you bank, but I have been a member of a certain credit union for nearly all of my adult life.  I've never thought too much about the differences between banks and credit unions.

But, did you realize that credit unions are (at least in the U.S.) not-for-profit whereas banks are for profit?

When you deposit your money into a credit union account, you are part owner of that credit union and it operates to serve you as part owner, whereas banks are owned by shareholders and operate (with your money) solely for the benefit of the shareholders.

Banks are run by paid executives and boards while credit unions are run by a board of member elected unpaid volunteers (who also are members of the credit union which they serve).

Banks are able to offer their services to just about anyone on the street, however credit unions are limited to offering membership to a specific group of folks who share some common bond.  Sometimes that is geographic, professional, or even religious, among many others.

Banks funds are insured up to $100,000 for individual depositors by the FDIC Federal Deposit Insurance Fund and credit unions' funds are insured by NCUSIF  National Credit Union Share Insurance Fund.

If you are looking for a place to put your money, give some thought to local credit unions in your areas.  Check them out and see if they are a good fit for you.

[KitKat]

Good information thartley, thank you. 

[PK]

Very fascinating. I didn't know that's how Credit Union's work. Thanks!

[Ginafish]

I didn't know credit unions were non-profit...hmm... wonder if I belong to any certain group of people?

[Nick]

I didn't know that either. Funny, I just opened an account with my local bank a couple of weeks ago.

[M3R1IN]

that's how credit unions operate in Canada as well I have actually received dividends from my credit union

[Soulessaint]

Thartley, you are very right. I'm a member with a credit union and have a banking account, there are differences in them. I feel everyone should have this information because people just don't know about it. Thanks for posting!!!! Gbya

[thartley]

As mentioned in an earlier post, at Credit Unions, your statements will show a monthly "dividend" whereas at a bank, I think it shows up as "interest" on your account.  But the dividend is because you are a part owner.  Its why at a cu you are called a member but at a bank you are a customer. 

Also, in my reading about credit unions are focused on service rather than profit.