CREDIT UNIONS AND BANKS

The primary difference between a credit union and a bank is their for-profit status. Banks are operated for-profit, while credit unions are non-profit organizations. This means that banks are responsible to owners and are often publicly traded. Since they must show a profit, they generally charge interest rates to borrowers that are higher than credit unions, and pay interest rates to depositors that are lower than credit unions ("Banking Information" 1).

This is because credit unions are generally comprised of members who share a particular characteristic, such as working in a particular industry. Credit unions for teachers are common, for example. Since credit unions are non-profit organizations, they are able to pay higher interest to depositors and charge lower interest rates to borrowers. In addition, since members are the only ones who participate in the credit union activities, there is additional incentive to provide a "good deal" to the membership base ("Banking Information" 1).

The types of accounts and activities that are offered at both institutions are similar, with checking accounts, savings accounts and consumer loans available from both banks and credit unions. However, depositors at banks have accounts insured up to $100,000 by the Federal Deposit Insurance Corporation (FDIC) while depositors at credit unions have their accounts insured up to $100,000 by the National Credit Union Share Insurance Fund (NCUSIF) ("National Cre

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Category: Business - C