In short, a credit union is a not-for-profit cooperative financial institution, owned and controlled by its members. A member is a person who uses a credit union’s service to save money and get loans at reasonable rates. To be a member, you simply need to belong to the credit union by having a share draft account.
Credit unions offer the same services as traditional lenders and big banks, and many times at a much lower rate of interest and higher dividend payout! That means you can manage everything from savings to spending, to auto loans, to your first home, to even business lending all in one place. How is a credit union able to offer better savings through lower interest rates and higher dividends? Because credit unions are owned by YOU – not stockholders looking for profit or a return on their investment. Cutting out these “middlemen” allow us to pass on the savings and earnings back to our members.
When credit unions were helping Americans through the Great Depression, the treasurer of a Midwestern credit union said that credit unions were “not for profit, not for charity, but for service,” and this philosophy still holds true. Credit unions continue to look out for their members’ best interests and provide a level of service that is not generally available at other financial institutions. Whether it’s providing a loan to help a member cover unexpected medical bills, giving financial counseling to a member whose company closed its doors or simply offering a better deal on a used car loan, credit unions make a difference for their members and the communities they serve.
How Do Credit Unions Differ from Banks?
- Not-for-profit cooperatives
- Owned by members
- Operated by mostly volunteer boards
Other Financial Institutions
- Owned by outside stockholders
- Controlled by paid boards