The Difference Between A Credit Union And A Bank Explained
The Difference Between A Credit Union And A Bank Explained
Content - Nate Drescher - March 25, 2020
It’s a question few know the answer to, but many ponder: What’s the difference between a credit union and a bank? On the surface, both types of organizations seem to do the same thing. You give them your money and, when you need it again, they give it back.
Both credit unions and banks also offer other perks and services. You can turn to either institution when you find yourself in need of a mortgage or auto loan. You can also earn interest on any money you have tucked away in a savings account.
So, with all these similarities, what really is the difference between a credit union and a bank?
What Is a Credit Union?
Choosing which bank to trust with your money is never easy. But you also need to ask yourself one other question: Why not “bank” with a credit union instead?
Before you can decide which establishment is right for you, you first need to learn the difference between a credit union and a bank.
To start, a credit union is a not-for-profit financial institution. In other words, ownership of the credit union is shared between all members rather than a single person.
So, when you bank with a credit union, you’re not just a customer. That’s right. You’re also a co-owner. And that doesn’t just mean you get the privilege of a fancy title, either.
Because there are no shareholders expecting dividends and returns on their investments, all proceeds go right back into the credit union. That also means that all members have the right to vote on how this money is reinvested back into the credit union.
Most of the time, that translates into lower fees, higher interest on savings accounts, and other valuable benefits.
Credit Unions are Cooperative
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