What are the core differences?
|Depositors are called members. Each member is an owner of the credit union.
||Depositors are called customers. Customers have no ownership interest. Banks are owned by investors who may or may not be customers.
|Credit unions are not-for-profit financial cooperatives whose earnings are paid back to members in the form of higher savings rates and lower loan rates.
|| Banks are for-profit corporations with declared earnings paid to stockholders only.
|Taxpayer funds have never been used to bail out a credit union.
||The Savings & Loan bailout in the 1980s, as well as the more recent bank bailouts, used taxpayer dollars.
|The cooperative spirit of credit unions allow them to share resources to bring convenience and savings to its members. CO-OP Shared Branch Network is one example of this cooperation.
||Competition between banks prohibits a sharing of resources.
|Credit union deposits are federally insured up to $250,000 by the NCUA, a branch of the federal government.
||Bank deposits are insured up to $250,000 by the FDIC, a branch of the federal government.
Cooperation among co-operatives is encouraged by the sixth of seven guiding principles for credit unions and allows them to share resources to bring convenience and savings to members. The Shared Branch Network is a prime example of this cooperation and offers members of participating credit unions access to 5,400 full-service branch locations in 50 states, 30,000 ATMs throughout the U.S. and Canada and over 800,000 ATMs worldwide. Shared Branch Network has become the nation’s third largest financial-institution branch network.
While many community and national banks operate with a focus on community investment and charity work, each is still a for-profit bank that uses customer deposits to create profits by investing or loaning it out to other customers.
Bank customers have no ownership interest in the institution, because every bank is owned by investors (who may or may not be depositors), and banks operate to earn a profit for those investors. Banks are owned and controlled by stockholders, whose number of votes depend upon the number of shares owned.
A credit union is a not-for-profit financial co-operative that exists to serve its body of members and the community in which they live. When you deposit your money, you’re actually buying shares of the company. Rather than being just a customer, you’re a member-owner.