The Credit Union Difference

Credit unions were originated in mid-1800s Europe. Banks were reluctant to lend money to certain individuals or groups, and these under served consumers pooled their resources and formed cooperatives.

Credit unions exist to serve the needs of their members. Credit unions educate members about sensible money management to help improve their financial condition. This service oriented philosophy is the most significant benefit of credit union membership. Credit unions are organizations of people, not of money.

As part owners, members have the right to vote on decisions affecting the credit union. One member has one vote, no matter if his or her deposit is $25 or $25,000.

Key differences between credit unions and banks:

• Credit unions are managed by volunteer Boards of Directors who serve only to assist the financial health of the entire membership. Credit union members vote in board elections.
• Credit unions do not operate for a profit, and therefore do not pay corporate income taxes. Credit unions pay other state and national taxes.
• Credit unions, by federal law, must retain a high percentage of capital to protect members' savings, weather tough economic times and fund the ability to grow and better serve members.
• Credit unions, as not-for-profit organizations, serve the financial well being of the member through free consumer education and counseling.

• Banks are managed by boards of shareholders who expect to profit from the customers who use their products and services.
• Bank customers have no input into the management of their financial institution. Banks operate for a profit, and therefore do pay corporate income taxes and all other state and national taxes.
• Banks can issue stock to raise capital and must retain a low percentage for savings. Banks can grow any way they choose and expand into any market they choose.
• Banks can serve any customer in any state, and their growth is not restricted by any government agency.