The Credit Union Difference
What is the difference between a credit union and a bank?
Credit unions differ significantly from banks in ownership, philosophy and business practices. We want you to know the difference.
Who owns a credit union? |
Who owns a bank? |
|---|---|
| In short, you, our members own the credit union. Each person who deposits money in a credit union becomes a member & part owner. Your deposit is considered your share of the ownership. |
Banks are owned by small groups of investors who expect a certain return on their investments. Customers of banks have no voice in how the bank is operated. |
Who controls a credit union? |
Who controls a bank? |
| Credit unions are democratically controlled, and operate under a one member, one vote system. They are run by a volunteer board of directors elected by and from the membership. |
Bank customers do not own a financial interest in the bank. Bank stockholders hold influence based on the total value of their stocks. Bank boards are generally compensated for their service. |
Who Profits? |
Who Profits? |
| Credit unions are not-for-profit financial cooperatives. Surplus revenue over expenses and reserves are returned to members in the form of higher dividends, lower loan rates and low-cost services. For example, according to the Indiana Credit Union League, Indiana’s 2.2 million credit union members benefit by close to $150 million annually through better rates and lower fees compared to if the only choice available to consumers was for-profit financial institutions. |
The profits of a bank, minus operating expenses, are divided among the stockholders of the bank. |
How is my money protected? |
How is my money protected? |
| Credit Unions are insured by the federal government. Federally chartered and many state-chartered credit unions are insured by the National Credit Union Share Insurance Fund (NCUSIF), which is managed by the National Credit Union Administration. As a federal deposit insurance fund, the NCUSIF is backed by the full faith and credit of the U.S. government. The NCUSIF is the only deposit insurance fund that operates on a pay-as-you-go system, which prevents the accumulation of annual losses. The NCUSIF has never had to use taxpayers' money. |
Banks are insured by the federal government. Their insurance fund is called the Federal Deposit Insurance Corp. Part of this fund, which covers savings and loans, had to be bailed out by using billions of dollars of taxpayers' money. The FDIC is not operated on a pay-as-you-go system. |
"Instead of making me feel like an account number, INOVA goes out of their way to show me that the member is number one."
South Bend, IN
