How are credit unions different from banks?
Editor’s note: This blog was originally published on September 4, 2020, and has been updated for accuracy and relevance.
Who actually owns banks and credit unions?
Credit unions and banks are both designed to help you open accounts, save money, and take out loans.
But let’s discuss the important differences in the way credit unions and banks go about their business before you mistake the two for one another.
What is a bank?
Banks are for-profit businesses. They accept cash deposits from their customers. Banks loan that same money to people and businesses, collecting a profit off the interest.
Get it? For-profit business.
You might be asking yourself what this means if you currently have an account at a bank. It’s simple: any profits made by a bank are used to pay out dividends to shareholders and savings account holders.
Shareholders control the decision-making at banks. The more shares you own, the more votes you get.
Bank board members are paid and act independently of bank customers, who have no say in the decision-making.
What is a credit union?
Credit unions run in a way that benefits their members directly.
It all starts with the fact that credit unions are owned by their members, aka you!
Credit unions’ board of directors are all volunteers and members. Shares don’t determine how much voting power you have at a credit union, either. Every member carries one vote.
The credit union motto is “People Helping People,” and it’s no wonder because credit union members literally borrow money from one another.
Think of the way credit unions operate in a savings cycle:
Members deposit money into their savings accounts
The credit union loans the money to other members
The credit union returns the profits made on loan interest to its members
Members complete the loop by receiving lower interest rates and higher savings rates
Credit union membership is community-based
Credit unions like Louviers Federal Credit Union are financial cooperatives. You have to belong to your local community, or field of membership, to join.
Most credit union fields of membership are based on the following:
Location: If you live, work, or worship in the same area as your local credit union, you’re allowed to become a member
Family: If you are related to a current member, you’re allowed to join your local credit union
Job: Select employers sponsor many local credit unions
Membership groups: If you belong to a local place of worship, labor union, school, etc., you’re allowed to join certain credit unions
Meanwhile, anybody can become a bank customer.
Who can become a member of Louviers FCU?
Membership at Louviers FCU is open to anyone who lives, works, worships, or attends school in Newark or Wilmington, Delaware, including employees/retirees of our select employer groups, as well as the family of current members.
All you need to do is maintain a $5.00 balance in a share savings account; then, you’re eligible to apply for a checking account, loan, or Visa Credit Card!
View our complete membership eligibility list, apply for membership online, or visit one of the four locations in Newark and Wilmington.
The number of members of credit unions in the United States from 2013 to 2020 (in millions, shown in the graphic below):
Credit unions offer better rates
Credit unions are traditionally known for operating in the best interest of their members. That includes offering loans for all purposes at competitive interest rates.
Because banks are driven by profits and shareholders, rest assured that any loan you apply for at a credit union will have a better interest rate.
Travel with the ease of a vacation loan from Louviers FCU. We offer three types of personal loans at rates as low as 5.00% APR*. See all rates and fees.
We have the data to back it up
See how Louviers FCU, among other credit unions in the United States, posted better national average rates** than banks on the following products:
Deposit products
Home loans
Auto loans
**Credit Union and Bank Rates for September 2021
Find a surcharge-free ATM near you
Credit unions may be limited to the region, county, or city you live in. However, credit unions every day are implementing Co-op financial services (ATMs you can easily access with no fees even if you are not a member of that specific credit union), updating mobile apps, and more.
The Co-op shared branch network of many credit unions has 5,600 branches and 54,000 surcharge-free ATMs available to members.
Why join Louviers FCU?
Louviers Federal Credit Union was chartered in 1968 and has operated continuously in New Castle County, Delaware, since its inception.
Our primary mission is to serve the financial needs of those individuals who share our core common bond.
We have four local branches in Newark and Wilmington.
Visit our ‘Who Can Join’ section to check our field of membership and apply today!
Consider what you want your financial institution to do for you, and remember to trust the organization that you choose!