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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