Credit Union

A credit union is similar to a bank in what it offers, but different in who owns it. Each member is a part-owner and usually has one vote, regardless of how much money they hold there. Membership is often based on a common bond, such as living in the same area, working for the same employer or belonging to the same organisation.

Because credit unions are not trying to make profits for outside shareholders, any surplus is returned to members through better rates, lower fees or improved services. As a result, they often offer slightly higher interest on savings and lower interest on loans than commercial banks.

For example, a credit union for teachers in a region might offer its members car loans at 6% when banks charge 8%.

Credit unions tend to be smaller than banks and may offer fewer products or less advanced technology. In many countries, members' deposits are protected by insurance schemes similar to those covering bank deposits.