Difference between credit union and bank

Posted By: Sm Adminon: November 17, 2015In: Miscellaneous

Credit union:
A credit union is a member-owned financial cooperative, democratically controlled by its members, and operated for the purpose of promoting credit at competitive rates, and providing of financial services to its members. Many credit unions also provide services intended to support community development on a local level.
Bank:
A bank is a financial intermediary that accepts deposits and channels those deposits into lending activities, either directly by loaning or indirectly through capital markets. A bank links customers that have capital deficits and customers with capital surpluses. Due to their importance in the financial system and influence on national economies, banks are highly regulated in most countries.
Differences:

Basis	Credit union	Bank
Definition	A non-profit-making money cooperative whose members can borrow from pooled deposits at low interest rates.(www.oxforddictionaries.com)	An organization where people and businesses can invest or borrow money, change it to foreign money, etc., or a building where these services are offered. (www.dictionary.cambridge.org)
Features	Lower interest rates, lower fees, and better rates of savings	Additional services, such as ATMs, online banking, debit cards, advance technology, speed and convenience
Objectives/Purpose	The purpose of credit unions are: To encourage members to save money Offer loans to the members Charge lower rate for the loans Return earning to the members in the form of dividends or improved services	The purpose of banks are: Safety of deposits Interest on deposits Loans Other features
Synonyms	Leading institution, savings institution, banking concerns	Fund, treasury, stock, reserve and coffer
Antonyms		Withdraw, draw off, appoint, distrust and suspect
Philosophy	Promoting thrift, providing credit at competitive rates, and providing other financial services to its members, as well as to support community development or sustainable international development on a local level.	To generate profit by providing financial services to customers.
Types	Its types are: Consumer credit unions Corporate credit unions	Its types are: Commercial bank, Community bank, Community development banks, Savings bank, Postal savings bank and Private banks
Called	At credit unions depositors are called members. Each member is a member of credit union.	Bank’s depositors are called customers. Customers have no ownership interest in the institution. Banks are owned by investors who may or may not be depositors.
Word origin	It was originated in between 1910-15 from Americanism.	The word bank was borrowed in Middle English from Middle French banque, from Old Italian banca, meaning “table” from Old High German banc, bank “bench, counter”. Benches were used as makeshift desks or exchange counters during the Renaissance by Jewish Florentine bankers, who used to make their transactions atop desks covered by green tablecloths.
History	Credit unions are relatively newer as compared to banks because the earliest known evidence of their existence dates back to 1852.	Letters of credit used in the 3rd century. Muslims used banking services in the 9th century. 12th century archeological finds include cheques.
Run by	Voluntary Board of Directors elected by the members.	Board of Directors appointed by the company or shareholders.
Caters to	Members only	Public or customers
Focus	Credit unions focus on consumer loans and member savings, as well as services needed by the membership.	Bank focuses on commercial loans and accounts and services that generate significant income.
Branches	Community orientated	Nationally or internationally
Pronunciation	Eng (UK): /ˈkrɛdɪt / /ˈjuːnjən/ /ˈjuːnjɪən/ Eng (US): /ˈkredət/ /ˈyo͞onyən/	Eng (UK): / baŋk/ Eng (US): /baNGk /
Main function		The main function of banks are: Primary function Accepting deposits Granting advances Secondary function Agency function Utility function
Owned by	A Credit Union is owned by its members, who are depositors of money in the institution.	Banks are owned by shareholders.
Profit motive	Credit unions are not for profit. Any money left over after expenses and reserves is passed back to customers (members) in the form of lower fees, lower loan rates, higher deposit yields and free services.	Banks aim to make a profit for shareholders.
Advantages/Benefits	Its advantages are: you’re more than a customer interest rates beat banks community comes first	Its advantages are: Promote saving habits among people Capital formation and promoting of industries Easiness of trade and commerce functions Generate employment opportunities Promote agricultural development Implementation of monetary policy Balanced development
Disadvantages	Its disadvantages are: Limited branch associations and ATMs Most are insured but not all Fewer services	Its disadvantages are: Can be far for rural residents Restricted hours Minimum deposit requirements may be too high Unfriendly staff Banks charge fees on many accounts Long lines in bank take time
Example in Sentence	You must go to the credit union to secure a loan. He works for a credit union.	He had opened an account in the bank. He took a loan from the bank.