What is a Credit Union?
How a Credit Union Works
Credit unions offer a wide range of financial services, such as savings accounts, checking accounts, credit cards, certificates of deposit and online financial services.
A credit union’s fees, interest rates and levels of service are highly responsive to the needs of its members. Generally, they offer lower interest rates on loans and higher interest rates on savings accounts and certificates of deposit.
Credit unions may be formed among any group of members who have a common interest -- usually community groups or employees of a particular organization. The board members of the credit unions are usually volunteers. Credit unions are generally not-for-profit, so profits are often shared by members.
Why Credit Unions Matter
Credit unions offer most of the same services as banks, but differ in that individual members are owners and there are generally less assets under management. Because credit unions are usually considerably smaller than banks, they are able to offer more personalized advisory services to their members, and they may offer banking services at a lower cost.
Federal and most state-chartered credit unions in the United States are able to insure their members’ savings accounts through the National Credit Union Administration, a federal organization with the full faith and credit of the U.S. government.