What is the Difference Between a Credit Union and a Bank?

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Credit Union

If you’re not currently a member here at Peach State, you might be curious about the differences between credit unions and banks.

 

Sure, both are financial institutions where you can deposit your money or get a loan, but their philosophies are quite different…

 

  Credit Union Bank
Philosophy A not-for-profit financial cooperative aimed at promoting thrift, savings, and sound credit use to improve the lives of its member-owners. A for-profit financial institution aimed at maximizing profits for stockholders.
Account Holders Every member of the credit union is an equal owner, not just a customer. Banks have customers. Only stockholders are considered owners of a bank, and they are not required to have an open account at the bank they invest in.
Leadership Credit unions have a Board of Directors who serve as unpaid volunteers. The Board is elected by the credit union’s members. A bank’s Board of Directors is elected by stockholders. They are paid and legally bound to make decisions that benefit stockholders, not the bank’s customers.
Mission Credit union profits, in excess of expenses, are returned to members in the form of lower loan rates, higher savings rates and lower fees. Banks maximize profits for stockholders, often offering little to no return to customers for their investment.
Taxation Credit unions are exempt from corporate income tax since they are not-for-profit cooperatives that return profits to their members. Banks are taxed because they are designated as for-profit corporations who only return profits to their stockholders.

 

 

But, most importantly, credit unions are all about people helping people. They exist to help people afford life and do this through lower loan rates, higher interest on deposits, and lower fees.  At Peach State, this philosophy extends to the communities in their footprint.  Each year Peach State donates almost a quarter of a million dollars to charitable initiatives, an annual scholarship program and support of the arts. The difference is clear.  See for yourself and join a credit union today!

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