What is a Credit Union?

When it comes to your money, you want to make sure that it's safe and available for you when you need it. Simply sticking it in the nearest bank is not necessarily the best thing; neither is a bank the right place for all of your financial needs. You could also consider things like credit unions, for example.

If you are looking for safe, convenient, and inexpensive options in regards to where you keep the money you make, you might want to consider a credit union. These institutions offer similar services as banks along with a few different ones but they will keep your money safe just the same.

Credit Union - What is it?

The people who manage the bank and operate the facility, then, do so for the purpose of serving the members. They provide:

  • Thrifty financial advice
  • Personalized service
  • Competitively-priced credit products
  • Other financial services

Credit unions are generally regarded as "not-for-profit cooperative institutions," at least according to the World Council of Credit Unions. Of course, world governments differ and therefore different regulations and definitions across the globe. Depending on the jurisdiction in which a credit union is established, rules and guidelines will vary.

The services and total system assets that are available to members may also significantly differ depending on the jurisdiction. These differences could include things like:

  • Volunteer operations
  • Total amount of dollars
  • Membership size

It is important to remember that "not-for-profit" is NOT the same thing as "non-profit." Not-for-profit organizations make money, but their focus is on serving customers (or in this case, members) instead of focusing on maximizing profits. Obviously, non-profit organizations are not in it for the money and usually DO NOT make profits in direct relation to the services they provide.

Credit unions generally operate under the guideline that they provide services to their members, which are private, individual consumers. There are, however, corporate credit unions, that provide the same ascribed services to corporations. This includes:

  • Operational support
  • Funds-clearing tasks
  • Product and service delivery according to corporate needs

How Is It Similar to Bank?

A credit union is similar to a bank because members have access to the same types of financial products and services as members of a bank, including:

Terminology and certain interior aspects might be different, but in general, the services are the same.

How Is It Different from Bank?

Rather than make all of the decisions regarding the future of the establishment members of a credit union elect a voluntary board of directors to act on their behalf. Aside from this, though, there are other differences:

  • Voluntary Board of Directors
  • Only credit union members may deposit or borrow money, unlike a bank which will potentially see anyone looking for their business
  • Wider range of loans and credit services at better prices than a bank
  • The customer service is usually rated to be higher than a bank, probably because of the membership clause
  • Credit unions are, generally, smaller than most banks averaging about 70% of the assets that banks have available.

Final Word

A credit union is a good option for people who are looking for better rates and more control over their money. At the same time, they are not as populous as banks so weigh your options before opening an account.