Why Choose A Credit Union?

Here’s some information on credit unions and why choosing one may be in a consumer’s best interest.

THE BASICS A bank is a for-profit institution, while credit unions are nonprofit. Credit unions are owned by members who pool money together to supply loans and services to other members, while a bank is usually formed as a corporation with shareholders. Credit union members elect a volunteer board of directors to represent their shared interests, while banks usually have a paid board of directors that represents shareholders’ interests.

INSURANCE National Credit Union Share Insurance Fund (NCUSIF) protects money at participating credit unions by offering insurance on deposits up to $250,000 per depositor, per credit union, per account ownership. Similarly, banks offer Federal Deposit Insurance Corporation (FDIC) insurance.

WHICH IS BETTER? Both banks and credit unions offer similar products and services at very competitive rates. From a consumer’s standpoint, credit unions offer their members more rewards than a bank. At the end of the day, profits derived from banking activity are returned to shareholders. Profits from a credit union, however, are more advantageously returned to its members in terms of higher interest rates on deposits, lower fees, or higher rates on savings accounts.