Credit union

A credit union is a cooperative financial institution that is owned and controlled by its members. Credit unions differ from other financial institutions (banks, savings and loan, etc.) in that the members who have accounts in the credit union are the credit union's owners.

Credit union policies governing interest rates and other matters are set by a volunteer Board of Directors elected by and from the membership itself. Only a member of a credit union may deposit money with the credit union, or borrow money from it. As such, credit unions have historically marketed themselves as providing superior member service and being committed to helping members improve their financial health.

Credit unions typically pay higher dividend (interest) rates on shares (deposits) and charge lower interest on loans than banks.[1]. Credit union revenues (from loans and investments) do, however, need to exceed operating expenses and dividends (interest paid on deposits) in order to maintain capital and solvency.

Credit unions offer many of the same financial services as banks, including share accounts (savings accounts), share draft (checking) accounts, credit cards, and share term certificates (certificates of deposit) and online banking.

Due to their status as not-for-profit financial institutions, credit unions in the United States are exempt from federal and state income taxes.

Credit unions exist in a wide range of sizes, ranging from volunteer operations with a handful of members, operated out of a shoebox, to institutions with several billion dollars in assets and hundreds of thousands of members.