Few people know the real differences between banks and credit unions, but every educated banking customer should be aware of them. In order to understand the best deal for your money management, here's an overview of what credit unions are and what they offer.
The primary difference between a credit union and a bank is that the depositors, usually called members, own the bank. Traditional banks are owned by financial corporations and their purpose is to turn a profit for investors. You already know where the profit has to come from.
Credit unions are nonprofit. They must offer competitive rates and put value in service over profits. However, like any business, credit unions have overhead – employees, facilities, equipment, software systems, etc – and most of the profit they take in on loans and investments pays expenses.
Credit unions are run by a board of directors, volunteers who are elected by members. They are unpaid, and usually members who desire a say in how the credit union runs...not to mention a pretty impressive line on a resume and some heavy-duty contacts. (Serving on a credit union board is a great career move)
That answer depends on the credit union rules. Some allow anyone to join, others are specific to a certain trade, industry, geographical area, or even a specific company or organization. There are credit unions for teachers and for Publix grocery store employees, for example. But most areas have general credit unions that cater to regional customers and have no other criteria to join.
Again, this depends on the credit union, but generally speaking, they operate similar to banks. They offer savings accounts, checking accounts, and loans. Credit unions may not offer the full range of services available at a bank, but they offer at least the basics.
Yes. Money deposited at a credit union is insured differently than money deposited at a bank, but the protections are the same and both are equally insured by the U.S. government.