Credit Union vs. Bank: What’s the Difference?
The main difference between credit unions and banks is that credit unions are member-owned financial cooperatives whereas banks are for-profit institutions owned by shareholders.
Before we move to more differences, let’s first understand Credit Union and Bank:
- Credit Union: A credit union is a financial institution that is owned and operated by its members, who are typically individuals with a common affiliation, such as being part of the same community, profession, or organization.
- Bank: A bank is a financial institution that is owned by shareholders and operates with the primary goal of generating profit.
Now, let’s get to Credit Union vs Bank:
Major differences between Credit Union and Bank
| Credit Union | Bank |
|---|---|
| Credit unions are not-for-profit organizations, prioritizing member service and offering more favorable interest rates and fees. | Banks are profit-driven institutions aiming to maximize returns for shareholders. |
| Credit unions typically have membership restrictions based on a common bond, such as geography, occupation, or organization. | Banks are open to the general public and do not have membership requirements. |
| Credit unions operate democratically, with members having a say in decision-making through voting and electing a board of directors. | Banks are managed by a board of directors appointed by shareholders. |
| Credit unions typically have a smaller network of branches and ATMs. | Banks have a larger presence across different locations. |
| Credit unions typically prioritize providing better service to their members. | Banks prioritize generating profits for their shareholders. |
So, these are the main differences between the entities.
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