How Credit Unions Work

Credit unions are member-owned financial cooperatives that operate on a not-for-profit basis. Unlike banks owned by shareholders, credit unions are owned by their members, who elect a volunteer board of directors. This structure supports competitive rates, lower fees, and service focused on members rather than shareholders.

Understanding Credit Unions: A Member-Owned Approach to Banking

What is a credit union? It's a financial cooperative where members pool money to provide banking services to each other. When you join, you become both a customer and an owner.

Members share a common bond, like an employer, community, or organization. Your deposits help fund loans to other members, and any earnings go back to you through better rates, fewer fees, and improved services.

What Credit Unions Offer: Products, Rates, and Community Focus

Credit unions typically offer checking, savings, loans, and credit cards. Since they're member-owned, pricing and policies are designed with your value in mind, not shareholder profits.

How to join a credit union depends on eligibility rules. You might qualify based on where you live, work, or organizations you belong to. Once you meet the requirements and open a share account, you can access all member services.

Credit union examples include teacher credit unions, military credit unions, and community-based institutions. Who uses banks and credit unions often depends on convenience, product needs, and service preferences.

How Is a Credit Union Different From a Bank?

The main difference comes down to ownership. Banks are typically owned by shareholders seeking profits, while credit unions are owned by members who use the services. This means your voice matters. You can vote on important decisions and policies.

This ownership structure affects everything from how decisions are made to where earnings go. Banks distribute profits to shareholders, while credit unions reinvest in better member benefits.

How Do Credit Unions Make Money?

Credit unions earn income primarily from interest on loans and fees for certain services. But here's the key difference: instead of maximizing profits for shareholders, they use those earnings to support operations and deliver better value to you as a member.

This might mean higher savings rates, lower loan rates, reduced fees, or improved services and technology.

The Broadview Difference: A Modern Vision Rooted in Credit Union Principles

Broadview Federal Credit Union combines these time-tested cooperative principles with modern tools and personalized support. We're here to walk alongside you on your financial journey, offering everything from everyday banking to specialized solutions.

Frequently Asked Questions

What are the downsides of credit unions?

Credit unions may have fewer branch locations in some areas compared to larger banks. They also have membership eligibility requirements, and ATM access and digital tools can vary by institution and network. These factors might influence convenience for some members.

Why choose a credit union instead of a bank?

Credit unions are member-owned financial cooperatives that operate on a not-for-profit basis, focusing on member value rather than shareholder profits. This structure often supports competitive rates, lower fees, and service centered on members' needs. Members also have a voice through democratic governance.

How do credit unions differ from banks?

The main difference between a credit union and a bank is ownership. Banks are typically owned by shareholders, while credit unions are owned by their members. This distinction influences how decisions are made, how earnings are used, and how members participate through voting.

How do credit unions make money?

Credit unions primarily earn income from interest on loans and fees for certain services. These earnings are then used to support operations and return value to members through competitive rates, lower fees, and improved services, rather than paying dividends to outside shareholders.

What are the requirements to join a credit union?

To join a credit union, you must meet specific eligibility rules, which often depend on a common bond. This bond could be where you live, where you work, or organizations you belong to. Once qualified, you can open a share account and access member services.

Are there specific credit score requirements for loans at a credit union?

Loan approval and the terms for any loan amount depend on an individual's creditworthiness and other financial factors. Specific credit score requirements are not universally fixed and can vary by loan product and the institution's policies.

^{Last reviewed: July 5, 2026 by the Broadview Team}