| Credit Unions |
Banks |
| Credit unions have members, not customers. Each person who
deposits money in a credit union becomes a member of the credit union because his deposit
is considered his share of the ownership. That means credit unions are member-owned. Each
member is also an owner of the credit union. |
Banks can serve anyone in the general public. Banks have
customers who have no voice in how the bank is operated. Banks are owned by small groups
of investors who expect a certain return on their investments. |
| Credit unions are democratically controlled. They are run by
a volunteer board of directors elected by and from the membership. Each member has one
vote in electing board members and certain committee members and can run for election to
the board or committees. |
At banks, only the investors have voting privileges.
Customers don't have voting rights, cannot be elected to the board, and have no authority
in the overall governance of their bank. |
| Credit unions are not-for-profit. This doesn't mean that they
do not or should not make a profit. After expenses are paid and reserves are set aside,
surplus earnings are returned to members in the forms of higher dividends, lower loan
rates and free or low-cost services. |
In banks, only the investors get a share of the profits. |
| Federally chartered and many state-chartered credit unions
are insured by the National Credit Union Share Insurance Fund (NCUSIF), which is managed
by the National Credit Union Administration, an agency of the federal government. As a
federal deposit insurance fund, the NCUSIF is backed by the full faith and credit of the
U.S. government. The NCUSIF is the only deposit insurance fund that operates on a
pay-as-you-go system, which prevents the accumulation of annual losses. The NCUSIF has
never had to use taxpayers' money. |
Banks are insured by the federal government. Their insurance
fund is called the Federal Deposit Insurance Corp. Part of this fund, which covers savings
and loans, had to be bailed out by using billions of dollars of taxpayers' money. The FDIC
is not operated on a pay-as-you-go system. |
| Credit unions are part of a worldwide support network that
includes credit unions, state credit union leagues, a national trade association (CUNA)
and a worldwide credit union organization ( WOCCU). They share ideas, information and
resources. |
Most banks belong to state and national organizations.
However, banks usually are reluctant to share ideas, information and resources with each
other. |
