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Credit
Unions
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Banks
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Depositors |
Depositors
are called “members.” Each member is part owner of the credit union.
Credit unions may only serve their members (eligibility to join is
determined by a credit union’s bylaws). |
Banks can
serve anyone in the general public, but their customers have no ownership
interest in the institution. Banks are owned by investors who may or may
not be depositors. |
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Structure |
Credit
unions are not-for-profit, meaning they are in business primarily to
serve their members. If a credit union has excess earnings after reserve
requirements are met, those funds are used to offer the members lower
interest on loans or higher interest on savings, or to develop new products
and services for the membership. Excess funds can also be paid back to
members in the form of a dividend. |
Banks are
for-profit, meaning their primary purpose is to generate profits for
their investors/stockholders. In banks, only the investors (stockholders)
get a share of the profits. |
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Governance |
Credit
unions are democratically controlled, meaning each member has a
say in how the institution is operated. Credit unions’ boards are unpaid
volunteers elected by and from the membership. Each member, regardless of
how much money they have on deposit, has one vote in electing board members.
Members can also run for election to the board. |
At banks,
only investors/stockholders have voting privileges. Customers don't
have voting rights, cannot be elected to the board, and have no say
whatsoever in how their bank is operated. Bank directors are paid, though
they may not be from the same community the bank is in and may not even use
the bank’s services. |
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Insurance |
Credit
union accounts are insured to $100,000 by the National Credit Union
Share Insurance Fund (NCUSIF). The fund is managed by the National Credit
Union Administration, an agency of the federal government. |
Banks
accounts are also insured to $100,000. Their insurance fund is
called the Federal Deposit Insurance Corp., also an agency of the federal
government. |
