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What is a Credit Union?
A credit union is a not-for-profit financial institution that exists to serve the financial needs of its members. Credit unions provide products and services to people who share something in common, such as where they work or live.
When a person joins a credit union, they are considered a member because they are an owner and shareholder of the institution. The democratic nature of credit unions allows all members to have an equal voice in the operation of the organization regardless of the amount of money each person has on deposit.
Credit unions exist to serve members, not profit from them. All of a credit union’s profits are returned to members in the form of fewer fees, lower rates on loans and higher rates on savings. Credit union membership offers numerous benefits, including access to a variety of services like simple savings, home equity loans, IRAs and more.
Just as banks have FDIC insurance, money at the credit union is also backed by the full faith and credit of the federal government. The National Credit Union Administration (NCUSIF) insures a member’s shares on deposit at a credit union up to a minimum of $250,000.
The difference between credit unions and banks.
| Credit Unions |
Banks |
| Not-for-profit cooperatives |
For-profit organizations |
| Credit unions return earnings to members in the form of lower loan rates, higher savings rates, and free or low-cost services. |
Banks returns profits to shareholders. |
| Each person who deposits money into the credit union is a member with a share of ownership. |
Customers have no ownership in the corporation. |
| Credit unions are controlled by a Board of Directors elected by members. |
Banks are controlled by stockholders who elect the Board of Directors. |
| Most credit union board members are volunteers. |
Bank board members are generally paid for their service. |
| Credit unions are only allowed to serve a select group of individuals that have a common bond such as where they work or live. |
Banks can serve anyone in the general public. |
Join today!
Minnesota Credit Union Network. Retrieved from: http://www.mncun.org/Credit_Unions_101_114.html |
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