Credit Union Versus Bank, What is the Difference?

Many people ask what the difference is between a credit union and a bank, thinking the two are very different from each other. Each is an institution that offer many of the same financial services such as checking accounts, savings accounts, and loans of various types.

The main difference is the beneficiaries of earnings.

A credit union is a not-for-profit cooperative, where customers are actually members and become part owners. Earnings are paid back to the member-owners in the form of higher savings rates and lower loan rates.

Banks are for-profit corporations where earnings and profits are paid to stockholders.

Credit unions are also based on stronger demographic principles. So, for example, members get to vote on who the board members are and how the credit union is run. Credit unions are local, and are often highly involved in community functions.

The U.S government has never needed to use taxpayer money to bail out a credit union. They are typically very stable institutions. Credit unions are federally insured, just like banks, to offer the same protection to your monies.

What does this mean for a typical customer/member?

For a typical customer/member, they will not notice much, if any, difference in their banking habits or conveniences when joining a credit union. The manner in which checking accounts are run, for example, are familiar and credit unions offer the same types of loans and services people traditionally expect from a bank.

Credit unions cooperate with one another and utilize CO-OP ATM networks so that you have convenient access to your money no matter where you are. Banks don't cooperate with each other because they are in competition with each other.

We encourage you to learn more about BMI Federal Credit Union and our principals. Also, if you have questions about how becoming a member of a credit union will work for you, contact us.