What Is a Credit Union?
Credit unions are not-for-profit financial institutions. They offer many of the same products and services as banks—including savings and checking accounts, loans, ATMs and online banking—but there are also big differences that can save you money. Credit unions are owned and controlled by their members, not profit-driven shareholders. That means the average credit union can offer better rates and lower fees. Learn about joining a credit union today!
Credit Unions Are Not-for-Profit
Credit unions put their money back into the communities they serve. Instead of paying bank shareholders, credit unions keep costs low and provide financial education and counseling services to people in need.
Products & Services
From mortgages and car loans to retirement accounts and credit cards, America’s 7,500 credit unions offer many of the same products and services as banks, and have the same sense of security, too. The National Credit Union Administration backs deposits up to $250,000 with the full faith and credit of the U.S. government. In fact, NCUA's National Credit Union Share Insurance Fund (NCUSIF) offers the same account protection that bank customers receive through the FDIC. For more from NCUA about the NCUSIF, click here.
Member-Owners & The Credit Union Difference
Credit unions consistently earn higher customer satisfaction ratings than banks. And why not? Because every member is an owner, too. When you join a credit union, you’ll get more personal service, better rates and lower fees than other financial institutions. 92 million members can’t be wrong.
Better Rates, Lower Fees
Lower loan rates, higher savings returns and limited fees mean credit union members, on a national average, save $72 per member or $136 per member household each year. To see the difference on major loan and savings products and typical fees, click here.
Joining a Credit Union
While not every person can join every credit union, there’s at least one credit union for everybody. Membership eligibility is defined by each credit union’s charter and can be based on your employer, school, house of worship or even where you live. Look for a credit union that is a member of the Co-op Network of surcharge free ATMs and shared branching centers. To switch your financial services to a credit union follow these 7 steps offered by aSmarterChoice.org.
How Banks and Credit Unions Differ
|At credit unions, depositors are called members or member-owners. Each member is an owner of the credit union.||Banks’ depositors are called customers. Customers have no ownership interest in the institution. Banks are owned by investors who may or may not be depositors.|
|Since credit union members are owners, each member, regardless of how much money they have on deposit, has one vote in electing members to the board that governs the operations of the credit union. Members can also run for election to the board.||Banks are owned and controlled by stockholders, whose number of votes depend upon number of shares owned. Customers don't have voting rights, cannot be elected to the board, and have no say in how their bank is operated. Directors are selected by current directors or by large block stock acquisition.|
|Credit unions’ governing boards are generally comprised of volunteers who reflect the diversity of the membership. (Note: a handful of states allow their state-chartered credit unions - Virginia is not one of these - to compensate their elected board members.)||Banks’ board members are paid, and do not necessarily reflect the diversity of their customer base.|
|Credit unions are local and are organized to serve the interests of their respective memberships.||Banks are open to the general public.|
|Credit unions are not-for-profit financial cooperatives, whose earnings are paid back to members in the form of higher savings rates and lower loan rates.||Banks are for-profit corporations, with declared earnings paid to stockholders only.|
|Credit unions focus on consumer loans and member savings, as well as services needed by the membership.||While consumer loans are an part of banks' product mix, banks generally focus on commercial loans and accounts and services that generate significant income.|
|Credit unions cooperate with other credit unions and share resources to bring convenience and savings to its members. CU Service Centers and the Credit Union 24 ATM network are just two examples of this cooperation between credit unions.||Competition between banks prohibits a sharing of resources.|
|Credit union deposits are federally insured up to $250,000 by the National Credit Union Administration (NCUA), a branch of the federal government, which is backed by the "full faith and credit" of the U.S. government.||Bank deposit accounts are insured up to $250,000 by the Federal Deposit Insurance Corporation (FDIC), a branch of the federal government. The FDIC is also backed by the “full faith and credit” of the U.S. government.|
Key Stats for Virginia-Based Credit Unions
RateWatch has provided all Virginia League member credit unions with a tool that allows you to view the average, high, and low rates on the most prevalent deposit and loan products at the county level for the Commonwealth.