Credit unions and banks are financial institutions that offer banking and loan products. They both accept deposits and use those funds to issue loans. Many of the products and services offered by banks may also be offered by credit unions making it a bit more difficult to determine the difference. However, credit unions are structured quite differently than banks.
- Credit unions are not-for-profit financial cooperatives.
- Just as banks are insured by the FDIC, credit unions are insured by the NCUA. In credit unions customers are called members because they belong to the membership cooperative. They are governed by a volunteer Board of Directors unlike the paid Board of Directors of banks.
- Profits at credit unions are reinvested into the membership whereas in banks profits may lead to dividend and bonus distributions to stock holders.