There are many Questions that you should ask yourself, before deciding to put your entire savings into a Credit Union or a Bank. Who are the dividends paid to? Do I have a vote in how the institution is run? Is this a Not For Profit or For Profit institution? We have outlined some of the differences between the two for you.
Credit Unions |
Banks |
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Not-for Profit financial cooperatives |
For profit corporations |
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Credit Unions are tax-exempt because they are not-for-profit cooperatives owned by taxpaying depositors |
Banks pay taxes on profits they distribute to outside stockholders |
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Credit Union Rates are capped at 18% |
Banks lending rates are unregulated |
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Organized to serve a specified field of membership |
Open to the public |
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Owned by their members Democratically controlled; one member – one vote |
Owned and controlled by outside stockholders |
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Focus on consumer loans and member savings |
Focus is on commercial loans and accounts |
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Dividends are paid to members |
Dividends are paid to the stockholders |
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Voluntary directors and committees. Voluntary reflects the diversity of membership |
Paid directors. Board members do not necessarily reflect the diversity of their customer base |
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Known for offering more favorable rates and services |
Known for higher fees and less favorable rates |
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Cooperation between Credit Unions |
Competition between banks |
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Insured to $100,000 by NCUA/NCUSIF |
Insured to $100,000 by FDIC/BIF |
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Insured fund is self insured – has never caused a loss to the taxpayer |
S&L bailout used BIF taxpayer dollars |
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Motivated to maximize service |
Motivate to maximize profits. |
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