Credit union

A credit union is a member-owned and controlled financial institution that provides credit and other financial services to its members.

Credit unions usually offer more competitive rates than banks and other financial institutions because of lower operating costs—credit unions are nonprofits. Because they are not driven by profits, credit unions only add a minimal markup for their services and products.

Credit unions are very particular about maintaining a strong and sound financial profile to ensure that the union can continue providing its services. Like banks, credit unions are required to insure all deposits so that in case of any problems depositors’ money are covered.

Members of credit unions usually have a common interest, like working in the same field or industry, living in the same area, belonging to the same religion, etc. So credit unions are exclusive in a sense, and cannot just offer its services to everyone who comes along. Membership requirements are usually followed strictly. Being indiscriminate in accepting members could mean losing their status as a credit union.

While most credit unions are not-for-profit, in some countries, such as Canada, credit unions are for-profit institutions.

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