What distinguishes a bank from a credit union?

The distinguishing factor between a bank and a credit union lies in the ownership structure. A bank is typically owned by shareholders, who receive shares of profit and may have a more broad focus on profit maximization. This means that decisions made within the bank often prioritize the interests of shareholders. On the other hand, a credit union is owned by its members, who are essentially the customers of the credit union. This member-centric model means that decisions are usually made with the aim of benefiting the members rather than generating profits for external shareholders.

This ownership structure impacts the services they provide, their fee structures, and how they operate overall. Credit unions often reinvest their earnings back into the organization to offer better services to their members, such as lower loan rates and higher interest on deposits. This community-focused approach typically leads to a more customer-oriented experience compared to traditional banks.