Difference between Bank and Credit Union

Key difference: Banks are privately owned institutions which provide banking services to its customers. Credit unions are non-profit institutions that are owned and run by its members.

Banks and credit unions are quite similar in nature, as in they both provide financial services such as saving accounts and home loans. However, they are different in some very key characteristics, such as banks are privately owned business, whereas, credit unions are non-profit financial cooperative.

Also, the main purpose of a bank is to generate profit by providing financial products and services such as saving accounts, checking accounts, home loans, business loans, etc. to customers. Banks take the money from the customers and invest it to make profit. Banks also have to deal with internationally banking regulations and competitors.

Whereas, credit unions are cooperative that are run by the member for the members.  Credit unions were established as worker’s cooperatives to help them to solve their financial problems. In order to deposit money with a credit union and take advantage of its services, one must be a member of the credit union. One doesn’t only have a account in the credit union, when one deposits money, they acquire a share of the union and thus become part owners. Also, the credit unions are headed by a voluntary board of directors, who are democratically appointed by the members on a one person one vote system.

Further differences include:

 

Banks

Credit Unions

Type

Privately owned business

Cooperative

Philosophy

To generate profit by providing financial services to customers.

Promoting thrift, providing credit at competitive rates, and providing other financial services to its members, as well as to support community development or sustainable international development on a local level.

Run by

Board of Directors appointed by the company or shareholders

Voluntary Board of Directors elected by the members

Caters to

Public or customers

Members only

Features

Additional services, such as ATMs, online banking, debit cards, advance technology, speed and convenience

Lower interest rates, lower fees, and better rates of savings

Branches

Nationally or internationally

Community orientated

Image Courtesy: whatis.com.jm, lintasbusiness.com

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