What's the difference between credit unions and banks?

Answer 1

There are many significant differences between credit unions to banks: structure, taxes, market share and asset growth, membership restrictions, rates and fees, etc.

For example:

--Structure--

Credit Unions
- are member-owned, not-for-profit financial cooperatives
- operate under a one member, one vote system
- have volunteer, unpaid boards
- earnings of credit unions are returned to members in the form of higher interest rates on deposit accounts and lower loan rates (minus operating expenses)

Banks
- for-profit, board and stockholder controlled, financial corporations
- stockholders hold influence in the bank based on the total value of their stocks
- customers of a bank who are not stockholders do not own a financial interest in the bank
- boards are compensated for their service
- profits of banks are divided among the stockholders (minus operating expenses)

--Taxes--

Credit Unions
- do not pay federal income tax on earnings however state chartered credit unions do pay other relevant taxes such as payroll, property and sales taxes
- were granted by Congress, a federal tax exemption based on their unique structure as non-profit cooperatives

Banks
- pay federal income taxes on corporate profits, although there are many banks that qualify for tax exempt status under subchapter S of the IRS Code
- do not have a tax exemption because they are a for-profit business intended to provide profits to their stockholders. Their non-stockholder customers own no financial interest in the bank.
- have paid more in dividends to stockholders than they paid in income taxes each of the last eight years.

Answer 2

The differences between credit unions in banks are that credit unions generally offer lower interest rates on loans. Many times they are partially funded by an entity association, union or similar group. Credit unions many times are privately owned and utilized a great deal for long term savings purposes. Banks are more commercial, higher interest rates, no association, union affiliation.

Answer 3

Credit Unions are local banks with more of a local presence, i.e SECU, State Employees Credit Union, they offer more options, better service than regular banks

Answer 4

credit unions are non-profit and owned by the members (the people who have accounts there). the members get to vote on who sits on the board.

banks are for profit, and owned by a person or corporation

Answer 5

you have to be a member of a credit union