Age Old Question: What is the Difference Between a Bank and a Credit Union?
Credit unions and banks… they’re both government-regulated financial institutions that keep your money safe, help you manage it from day to day, and lend you money when you need it. What most people don’t realize is that there are some differences between the two types of businesses that can have an impact on their customer’s bottom line.
Credit Unions are Not for Profit. They are owned and operated by their members. Decisions are made by an elected, volunteer board of directors who put member needs ahead of profits. Like banks, credit unions are focused on making money, but profits are returned to the member in the form of lower rates and fees, improved technology and community investments.
Banks are for-profit organizations that are owned and operated by investors or shareholders. They have invested in the bank to make a profit. Decisions on business practices and rates and fees are controlled by those investors who are hoping to grow their investment.
Credit Unions Are Co-operative. It’s hard to imagine that competing businesses would share best practices and ideas, but credit unions were established to do just that – and it can be very beneficial to members. In fact, many credit unions pool together their branches, allowing members to bank at their home credit union while visiting another credit union’ branch. It’s called Shared Branching and Financial Center is a participant. We’d like to see a bank try that!
Credit Unions Are Huge Community Supporters. We are not saying that banks don’t give back because they certainly do. However, credit unions were established on the principle of providing social improvement for all. (And as not-for-profits themselves, credit unions have a soft spot for other organizations that work to improve the community we all share.) While each organization has their own passion, Financial Center is focused on providing financial education for youth and adults, supporting local food pantries, and encouraging employees to give back with paid time to volunteer for the organizations that matter most to them.
When you are thinking about choosing a new financial service provider, make sure you do your research. Know who you are banking with, how they do business, and ask them what they will do for you to help improve your financial life.
If you’re already a proud credit union member, we ask you to share this post with others who may not know the benefits of banking with a locally-owned and operated credit union like Financial Center and others.