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credit unions vs. banks

In many ways, credit unions and banks seem very similar. Both are financial institutions that offer checking and savings, loans, CDs, and other long-term special investment accounts. But in reality, they are very different.

A credit union is a not-for-profit financial cooperative owned and controlled by you, the member. When you deposit money into a credit union, you become a “part-owner” with the power to vote on credit union choices and elect individuals to govern the cooperative.

In contrast, a bank is a for-profit business governed by a controlled board that answers to stockholders who serve as owners. Banks charge the highest fees possible for services so they can maximize returns to their stockholders.

Credit unions do not pay stock dividends, but instead return earnings to consumers in the form of lower loan rates, competitive savings rates, and lower fees on financial products and services.

Credit Unions

  • Not for profit
  • Low loan rates
  • Owned by members
  • Operated by mostly volunteer boards
  • Prioritizes consumers
  • Socially responsible

Banks

  • For profit
  • High loan rates
  • Owned by outside stockholders
  • Controlled by paid boards
  • Prioritizes stockholders
  • Corporately responsible
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