The Difference Between Credit Unions & other Financial Providers

The Difference Between Credit Unions & other Financial Providers

The Credit Union Difference

What makes a Credit Union different from any other financial provider?

  • Credit unions are owned by all their members. One Member One Vote.
  • Every Credit Union is a ‘not-for-profit’ financial co-operative.
  • Surplus income generated is returned to the members as a dividend to savers and/or an interest-rebate to borrowers, or it may be directed to improve or provide additional services for members.
  • Membership of a Credit Union is open to people who have, in relation to all other members, a unique ‘common bond’.
  • There are no transaction charges on loans or saving accounts.
  • Loans are insured at no direct cost to the eligible member.
  • Savings are insured at no direct cost to the eligible member.
  • Flexibility -you can repay a credit union loan earlier or make larger repayments than agreed with no penalty.
  • Additional lump sum repayments are accepted with no penalty.
  • The Credit Union also works in co-operation with the local community.

Credit Unions Other Financial Providers
Not-for-profit, member-owned financial coperatives For-profit institutions owned by shareholders
Conduct business solely with their members, and their members are in turn the owners of the credit union. There is a coincidence of ownership and consumption. Conflict between depositors and borrowers (the customers) and shareholders (the owners).
Members share a common bond, such as where they live or work. Typically serve middle-to-high income clients. No restrictions on clientele.
Credit union members elect a volunteer board of

directors from their membership. Members each have one vote in board elections, regardless of their amount of shares in the credit union.

Shareholders vote for a paid board of directors who may not be from the community or use the bank’s services. Votes are weighted based on the amount of stock owned.
Surplus monies generated from business activities belong to the members, and are returned to members by way of a dividend or
interest rebate
Shareholders receive a pro-rata share of profits.
Exist to attain the economic and social goals of members. Exist to maximise profit and shareholder wealth