The credit union movement’s philosophy is “People Helping People.” Credit unions are not-for-profit financial institutions, who put people first. They are owned and controlled by its members, and have a volunteer board of directors that oversees policies. Each member has voting rights.
Credit unions are a popular alternative to traditional banks in the United States, with over 5,000 credit unions serving more than 140 million members nationwide.
Why credit unions are needed
Credit unions got their start in the U.S. to serve working Americans. They provided a needed alternative so families, farmers, small business owners, and others left behind by banks had financial options.
For more than 100 years, people have come together to be a part of credit unions, and support each other through tough financial times.
Credit Union Features
Banks and credit unions both support your financial needs, but Credit Unions operate differently:
- Business Model: Banks are typically profit-driven public companies serving shareholders, while credit unions are not-for-profit cooperatives owned by their members, who elect a volunteer board. This means credit unions often return profits to members through lower fees and better rates.
- Member Service: Credit unions focus on their members, with personalized attention and a community-oriented approach. Credit unions often provide that through dedicated service and educational resources.
- Membership: Joining a credit union usually requires meeting specific criteria like your job or location, giving you ownership and voting rights. Banks generally don’t restrict membership.
- Financial Products: Credit unions tailor their products to meet member needs, often providing better service than other financial institutions, with lower fees and more favorable rates.
- Fees and Interest Rates: Credit unions typically offer lower or no fees and better interest rates on loans and deposits.
Congress recognized the importance of the credit union movement and provided credit unions with the federal income tax status to ensure they continued to meet the needs of underserved people and communities. Credit unions pay billions in state and local taxes each year. The only exception is the federal income tax on profits. And that’s because those profits are returned to you.
