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Differences between Credit Unions & Banks

Unlike a bank, credit unions are owned, operated and controlled by their members. The main objective of credit unions is to give member-owners an opportunity to save for the future, make intelligent use of credit and use personal financial counseling to effectively manage their money.

Because credit unions are not-for-profit cooperatives, they have no stockholders to satisfy. Therefore, credit unions return any profits made back to the members in the form of cost-savings and better service.

Members take an active role in the credit union by electing fellow members to serve on the volunteer Board of Directors and other governing committees. Each member has one vote, regardless of how much money he or she may have on deposit.

Credit Unions are highly organized, closely regulated, operate in a very prudent manner and each account is insured up to $250,000 by the National Credit Union Administration, an agency of the federal government.

Membership in credit unions is free and open to groups that share something in common, such as where people live, work, or attend church, for example. The services of credit unions are the same or similar to those provided by other financial institutions.





Not-for-profit cooperative

For-profit cooperative

Primary Objective

To meet member/owner needs

To maximize profit


All members who are users of services

Stockholders who may or may not be customers or users



Paid Directors


Member-controlled, one vote per member

Only stockholders vote, one vote per share of stock

Distribution of Net Income

Dividends issued to members and used for capital development, additional locations, equipment, etc.

Dividends issued only to stockholders

Community Links

Owners/leaders reside or have an interest in the community

Owners/leaders may live anywhere in the world; headquarters could be anywhere in the U.S.


Offer better overall rates and lower fees due to the nature of the organization and its dividend distribution

Rates and fees may not be favorable because of for-profit status

Generation of Capital

Generated only through income stream

Generated through income stream and/or issuance of stock

Who Benefits



From The Credit Union Difference a periodical printed by the Missouri Credit Union Association and printed in the Kansas City Star September 2007