How Do Credit Unions Work?

Members deposit their savings in their credit union. These savings provide a fund from which loans for almost any good purpose can be made to other members. Loans are made at low cost. After expenses are paid and legal reserves are set aside, the remaining income is paid to the members on their savings. Savings are called "shares" in a credit union and earnings are called "dividends." Safety is assured by close scrutiny by the elected directors. The National Credit Union Administration has strict regulations and provide thorough and regular audits. Employees are bonded. A further safety factor is the fact that borrowers realize that they borrow from their friends and fellow workers.

What's the difference between a bank and a credit union?
A credit union is not a bank; it is not a labor union, nor a loan company. It is not a credit bureau. It is not a business in the usual sense, as it does not have stockholders who demand a profit. It differs from other financial institutions because it is a coopeative-member-owned and member-operated service that encourages thrift and savings and provides a means of credit for its members.