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What is difference between Bank and Credit Union?
Credit units are financial units that do not work for profits. They consist of members with the sole aim to help the causes of its members and to ensure that they get the same banking products as from any other bank, easier and with lower rates of interest. They provide assistance to loans, Internet payment, monthly electricity and water payment and more.
What is the difference between banks and credit unions?
- In a credit union, each member in the union has some ownership rights. They are depositors and they have a say in the functioning of the union. On the other hand, the people who deposit money in banks are their customers and beyond the service they get, they do not have any say in terms of ownership or functioning. In fact, banks are primarily owned by investors.
- In a credit union, sense every member has equal rights, irrespective of the amount of money they deposit, they have a say in electing the board members. That is, every member can use their rights. Alternatively in banks, the say in banks are vested with stockholders and the number of votes are proportional to the quantity of shares owned.
- Volunteers can sign up with credit unions to add to the diversity of its membership and functioning. Banks work purely on monetary benefits and there is no reflection of diversity or the need for it there.
- Credit Unions are specific to some members and they do not operate for the general public. Banks on the other hand, are present for any person regardless of the background to avail their services.
- Since credit unions do not operate for profits, the earnings they get are either returned to the members directly or they are given the benefit of low interest rates. Regardless of how the bank is running, the interest rates are fixed and there is no extra transaction beyond the ones as a part of the service.
- Credit unions are more personal since their agenda is mainly around member loans and savings. Banks are slightly universal with equal stress on personal financial portfolio as well as commercial loans and schemes.
- Different credit unions may unite with each other to increase the benefit to its customers. Banks on the other hand compete and therefore do not share the benefit.