What Makes a Credit Union Different?

7/12/2023

Credit unions are member-owned. As a member of a Credit Union, you're also an owner/shareholder. Without outside shareholders or investors trying to maximize profits at the expense of our members, credit unions can conduct business based on the best interest of the membership. Most people know that banks offer basic financial services such as checking and savings accounts, but do you know what a credit union is? In this blog post, we'll explore what makes a credit union different from its traditional banking counterpart so that you can make an informed decision on where to bank.

This chart explains some differences between banks and credit unions.

	Credit Union	Bank (Publicly Traded)
Member/Customer	When you open a savings (or share) account at a credit union, you become a member. Each member is an owner of the credit union.	When you hold an account at a bank, you are called a customer. As only a customer, you have no ownership of the institution.
Ownership	Members own their credit unions. When you deposit your money, you’re actually buying shares of the credit union. Rather than being a customer, you’re a part owner; that’s why your Membership account is called a "share."	Banks are owned by investors who may or may not be customers of the bank.
Control/Management	Since credit union Members are owners, each member has an equal vote in electing directors no matter how much money they have on deposit or the number of accounts they have. Members can also run for election to the Board.	Banks are owned and controlled by stockholders, whose number of votes depends upon the number of shares owned. Customers do not have voting rights, generally cannot be elected to the Board, and have no say in how their bank is operated.
Board of Directors	Unpaid volunteers elected by credit union Members, giving members more influence on credit union decisions.	Paid directors are elected by shareholders, who make decisions in the best interest of the stockholders, not the customers of the bank.
For Profit / Not-For-Profit	Credit unions are not-for-profit financial cooperatives that exist to serve their members rather than to maximize corporate profits.	Banks are profit-oriented organizations and exist to earn a profit for stockholders.
Earnings	Credit unions distribute earnings back to members in the form of higher savings rates, lower loan rates and fees, and enhanced products and services.	Bank's declared earnings are paid to stockholders.
Insurance	Credit Union deposits are federally insured up to $250,000 by the National Credit Union Association (NCUA), an agency of the U.S. Federal Government. At some credit unions, Member shares and deposits in excess of NCUA limits are fully insured by the Massachusetts Credit Union Share Insurance Corporation (MSIC). SCU Credit Union is insured by both the National Credit Union Association (NCUA) and Massachusetts Shared Insured Corporation (MSIC). Your money is 100% safe. 100% insured.	Bank deposits are federally insured up to $250,000 by the Federal Deposit Insurance Corporation (FDIC). Additional Bank Insurance Facts

Keeping Your Money Safe
SCU Credit Union is insured by both the National Credit Union Association (NCUA) and Massachusetts Shared Insured Corporation (MSIC). The combination of NCUA and MSIC insurance provides members with 100% deposit insurance on all their deposit accounts.

Banks are insured by the Federal Deposit Insurance Corp (FDIC). FDIC is the agency that insures deposits at member banks in case of a bank failure. As of the end of 2022, about 43% of all bank deposits were uninsured, according to the FDIC. (Source: FDIC Quarterly Banking Profile - 4th Quarter 2022) In Massachusetts, the Depositors Insurance Fund (DIF) will cover some deposits above the FDIC insurance amount. Depositors Insurance Fund (DIF) is a private, industry-sponsored insurance fund that insures all deposits above Federal Deposit Insurance Corporation (FDIC) limits at member banks.

Board of Directors
Banks are owned and controlled by stockholders, whose number of votes depends upon the number of shares owned. Customers do not have voting rights, generally cannot be elected to the Board, and have no say in how their bank is operated. Paid directors are elected by shareholders, who make decisions in the best interest of the stockholders, not the customers of the bank.

Credit Unions are governed by an unpaid volunteer board of directors who are elected by the membership. Each SCU Credit Union member has an equal vote, regardless of account balances or number of accounts.

Ownership
Shareholders own banks. They buy stock in the bank and expect to make a profit on their investment through the fees and rates customers pay. Banks are focused on making a profit, rather than specifically centering on the needs of the account holders. This is one of the reasons you’ll often find that banks charge more fees, and at a higher rate than credit unions do. Interest rates on lending also tend to be higher at banks, while their APYs on savings products tend to be lower.

Banks are for-profit enterprises, while credit unions are not-for-profit cooperatives owned by their members.

Members “buy” shares or part ownership in credit unions by simply opening a savings (share) account. Without outside shareholders or investors trying to maximize profits at the expense of members, credit unions can conduct business based on what they believe is in the best interest of their membership.

At SCU Credit Union, we believe that our members should be the highest priority. All profits are reinvested to provide better rates, fewer fees, and other benefits to our members.

Our mission is to positively impact the financial well-being of our members by providing access to a wide range of products and services; to support the diverse communities we serve through education and collaboration; and to foster a rewarding environment for our employees.

We're just like you - local and proud of it. Our strong bond with members and neighbors is something we truly value. That's why being active in the community means the world to us. The money you put into SCU Credit Union stays in your community.

When it comes to choosing where to manage your money, the choice between a credit union and a bank is up to you. We invite you to learn more about our wide array of savings products and see how SCU Credit Union can help your money grow. Here at SCU Credit Union, we pride ourselves on being a credit union you will love. Your money is 100% safe. 100% insured.

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