What is the difference between a credit union and bank?

How Are They Different?


Credit unions are not-for-profit financial cooperatives. Earnings are paid back to members in the form of higher savings rates and lower loan rates. Banks are for-profit corporations. Declared earnings are paid to stockholders only.
Credit unions are member owned. Each depositor is an owner of the credit union. Members vote for and get elected to the credit union board. Banks are stockholder owned. Customers do not vote or have a say in how the bank is operated. Stockholders may or may not be customers of the bank.
Credit union board members reflect the diversity of the membership and serve voluntarily. Bank stockholders are paid and no not necessarily reflect their customer base.
Credit unions generally have fewer fees and better interest rates. Banks usually have more and higher fees and less competitive interest rates, especially for savings and investment accounts.
Credit unions are local and serve the interests of their membership. Affiliation, such as location or employer, is required to become a member. Banks are open to the general public and can serve anyone.
Credit unions share resources with other credit unions, such as ATM networks, to offer greater convenience to members. Banks compete with each other and do not share resources.