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What Is A Credit Union?

Posted on August 10, 2015

What Is A Credit Union?

Although most people have heard of credit unions, if you don't belong to one, there's a good chance that you don't understand their purpose and function.

What is a credit union? Is the title "credit union" simply another name for a bank? Or, are credit unions distant relatives of banks? Why would someone choose to become a member of a credit union? Whether you're interested in joining a credit union or you're simply curious, scroll down to learn a little more about this not-for-profit alternative to a bank. 

What Is a Credit Union?

A credit union is a member-owned, not-for-profit financial cooperative that provides financial services to its members, including savings and checking accounts, loans, mortgages, online banking, bill payment, and more. Although the function of a credit union is quite similar to a bank, there are some crucial differences: 

The Member/Customers

At a credit union, the people who use the cooperative's services are known as members, and each member (regardless of how much money they have at the credit union) is an owner of the cooperative. People who use a bank's services, on the other hand, are known as customers, and customers have no ownership interest in the institution. 

The Board

A credit union is a not-for-profit cooperative, so each member/owner can vote for board members. Members can also be elected to the board, though they will not be paid for their services. A bank, on the other hand, is an institution owned and controlled by stockholders. 

The Community

Because volunteers form a credit union's board, the members reflect the diversity of the people using the credit union. Credit unions are working to serve their members, reflecting the interests of the community, while banks are working to maximize their profits, balancing financial strategy with customer satisfaction. Credit unions also work with other credit unions to share resources, while banks engage in fierce competition.  

The Services

Credit unions offer all essential banking services. The services offered at credit unions and banks are quite similar, however credit unions do offer some advantages. Because they are not-for-profit cooperatives, credit unions typically have lower fees and loan rates, and many members appreciate that their services are tailored to the local community's needs. 

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Are you interested in joining a credit union? If you live or work in southwest Missouri, check out BluCurrent Credit Union. With our unbeatable loan options, 6,800 shared branches across the country, and fantastic customer service, we might be the perfect financial service for you. In addition to our three locations (two in Springfield and one in Nixa), we also offer online and mobile banking for your convenience. Plus, we provide nationwide ATM fee refunds with our checking accounts! To learn more about our services and benefits, please stop by one of our branches or explore our website. We would be happy to help you further understand the differences between banks and credit unions.