This means members generally get lower rates on loans, pay fewer (and lower) fees and earn higher APYs on savings products than bank customers do.īanks, on the other hand, are in business to make a profit. It is the credit union’s mission to provide its members with the best terms it can afford for their financial products. ![]() This means credit unions do not have to worry about making profits for shareholders. In addition, as a nonprofit, credit unions are also generally exempt from federal taxes, and some credit unions even receive subsidies from the organizations that they are affiliated with. Credit unions typically open membership to individuals who share a common bond, such as the industry they are employed in, the community they live in, their faith or their membership in another organization. not-for-profit divide is the reason for the difference between the products and services each type of institution offers.Ī credit union is owned by its members, since the institution is actually set up as a cooperative. ![]() Banks are for-profit, meaning they are either privately owned or publicly traded, while credit unions are nonprofit institutions. What makes banks and credit unions different from each other is their profit status.
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