What characterizes a credit union?

A credit union is characterized as a member-owned financial cooperative. This means that it is operated for the benefit of its members, who are also its owners. Each member has a say in how the credit union is run and may also share in its profits, typically in the form of lower fees and better interest rates compared to traditional banks. Unlike for-profit institutions, which prioritize maximizing profits for shareholders, credit unions focus on providing value and services to their members. The cooperative structure encourages savings, loans, and financial services to meet the needs of its community.

This member-centered approach is a significant factor that distinguishes credit unions from other financial entities, such as for-profit banks that are driven by profit motives, government-owned institutions which may have different regulatory frameworks and purposes, or large multinational banks that operate on a global scale without the same community focus.