Business
Credit Unions Explained
Discover what a credit union is, why it's different from a bank, and how these member-owned financial cooperatives are gaining popularity.
What is it?
A credit union is a not-for-profit financial cooperative owned and controlled by its members. Unlike traditional banks that are for-profit institutions serving shareholders, a credit union's primary purpose is to serve its members. They offer many of the same services as banks, including savings and checking accounts, credit cards, mortgages, and auto loans. Membership is typically based on a common bond, such as where you work, live, or belong to a certain group. Profits, known as surplus, are returned to members through better rates and lower fees.
Why is it trending?
Credit unions are gaining traction as consumers seek more ethical and community-focused banking alternatives. In an era of high bank fees and impersonal service, the member-first philosophy is a major draw. People are attracted to the potential for lower interest rates on loans and higher yields on savings accounts. The cooperative structure often fosters a stronger sense of community and trust, which resonates with individuals looking for a financial institution that prioritizes their well-being over shareholder profits.
How does it affect people?
Joining a credit union can have a direct positive impact on a person's finances. Members often benefit from lower fees for services like checking accounts and ATM access. They may secure car loans or mortgages at more competitive rates and earn more interest on their savings and deposits compared to large commercial banks. Because they are part-owners, members have a say in the credit union's operations and can feel more connected to their local financial community, receiving personalized service and financial education.