Posted on July - 01 - 2010
Credit Unions and Banks: What’s the Difference?
One of the questions we occasionally get asked here at MoneyAisle HQ is “What’s the difference between banks and credit unions?” – we’ve got both of them bidding to give you great rates in our auctions, and our customers will often see credit unions pop up among the winning bidders (particularly for car loans and car loan refinances.)
If you’re wondering what the distinction is, here are the two most important differences with a credit union:
- Credit unions are member-owned. If you have an account at a credit union, you’re a part owner in the enterprise.
- Credit unions are not-for-profit. Any profits credit unions do make are distributed as dividends to their members.
What about the FDIC?
Some of you may be wondering if money in a credit union deposit account is federally insured. The answer is yes – there’s an organization called the NCUA which functions like an FDIC for credit unions. Your deposit accounts are insured up to $250,000 per institution just like with an FDIC-insured account.
Any more questions about credit unions? Leave it in a comment below. We’d love to hear from you!
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