Smart Banking: Credit unions vs. banks – what’s the difference?

first_imgBanks and credit unions look a lot alike. They both offer checking accounts, savings accounts and ATMs. They both make loans. But there are some big differences consumers need to keep in mind when choosing which type of institution they’re going to entrust with their hard-earned money.Different bonesThe differences between banks and credit unions run deep — all the way down to their fundamental structure and purpose.BanksFor-profit enterprises held by private owners or stockholders.Account holders are called “customers,” and the bank uses their money to make consumer loans and other investments.Any revenue left over after the bank covers all its costs goes to its owners as profit.Other than their ability to pick up and move their accounts, customers don’t have much say in what goes on at their bank, since the institution is expressly run for the benefit of the owners, not them.Credit unionsNonprofit enterprises (and thus exempt from most taxes).Account holders are called “members,” and they all have an ownership stake in the credit union.Like a bank, the credit union uses account holders’ money to make loans, but unlike a bank, any “profits” go back to members in some form.The structure of credit unions generally gives members much more say over how the institution is run than customers at banks have. 140SHARESShareShareSharePrintMailGooglePinterestDiggRedditStumbleuponDeliciousBufferTumblr continue reading »last_img

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