BAD CREDIT CASH LOANS AND FINANCING: Unique Content Article: Banks And Credit Unions Differ In Fundamental Ways

Banks And Credit Unions Differ In Fundamental Ways

by Martha White

Banks and credit unions offer many of the same services including loans, mortgages, insurance policies and savings accounts. Both establishments are overseen by government agencies that provide protection against loss of savings deposits. However, the two types of financial institutions are organized differently and this has direct implications for their customers.

Goals

A credit union exists to promote the financial welfare of a specific group of people united by a common bond. They are often formed around a particular goal such as community development. Banks are led by a profit motive. They are in business to maximise the price of stock and increase dividends for shareholders.

Profits

Banks are for-profit institutions that use their proceeds to reward their investors. Credit unions are classified as not-for-profit. This doesn't mean that they don't make money. They have to earn enough from loans and investments to pay interest to savers and cover their expenses. The difference is that their excess profits are not paid out, but are used to lower the cost of loans or raise interest rates on savings.

Customers

Banks seek customers from the general public. A credit union's services are for members only. To qualify for membership in a credit union you must live in a certain area or belong to a particular organization. Workers unions, churches, and other associations can choose to charter a credit union to benefit their communities.

Ownership

A bank is owned by stockholders who benefit directly from its profits. A credit union is owned collectively by its member-customers. Each member has equal ownership, no matter how much or how little money they have deposited, and each gets one vote in elections.

Directors

A bank's board of directors consists of paid officials elected by the stockholders. Their decisions must ultimately benefit those investors. A credit union's board of directors is made up of volunteer members elected by the membership as a whole. Their goal is to serve the credit union's member-customers.

Customer Benefits

National banks with a huge customer base tend to provide more services than local credit unions and invest more in technology. Many banks offer their customers the convenience of being able to quickly check their balance on their cell phone or pay bills on their laptop. The advantages offered by a credit union are more basic. They typically offer higher interest on savings, lower penalty fees and lower interest rates on loans. Members also benefit by knowing that any profits made by their financial organisation are used to help their community prosper. - 41115

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New Unique Article!

Title: Banks And Credit Unions Differ In Fundamental Ways
Author: Martha White
Email: jmkiritsis1@gmail.com
Keywords: Banks,Credit Unions,Credit,finance,money,business,Personal Finance
Word Count: 419
Category: Finance:Credit
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