Why Credit Unions?
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Curious about the differences between credit unions and banks? Perhaps the biggest difference between the two lies in their respective objectives: While banks exist to maximize profit for their stockholders, the guiding principle of credit unions is, and always will be, service to their members. Read on to learn what else credit unions have to offer over their for-profit counterparts.
| CREDIT UNIONS | BANKS |
|---|---|
| Not-for-profit cooperatives | For-profit |
| Tend to pay higher interest rates, have lower loan and credit card rates, and have lower fees | Tend to pay lower interest rates, have higher loan and credit card rates, and have higher/more fees |
| Funds are insured by the NCUA up to $250,000 | Funds are insured by the FDIC up to $250,000 |
| Owned by members | Owned by stockholders |
| Boards of Directors are democratically-elected by members; each member is entitled to one vote regardless of the amount of money they have on deposit | Boards of Directors are elected by stockholders only; those owning the largest number of stocks are entitled to the largest number of votes |
| Often have lower minimum balance requirements | Often have higher minimum balance requirements |
| Have defined fields of membership based on geographic location, employer, profession, educational institution, or place of worship | Open to anyone who can meet balance requirements |
| Dividends issued to members | Dividends issued only to stockholders |