Importance of Credit Union Vs. Bank
The issues regarding credit union vs. bank have gained substantial importance over the passage of time. In the present day world money seems to be the most important thing and the lenders are the best friends of common people. In this scenario the borrowers have to make the choice between credit unions and the banks.The choice is indeed dicey as at present both the entities provide lucrative financial offers from the point of view of the borrowers. They offer substantial financial benefits to anyone who avails their services. That it makes all the more difficult to make a choice.
Differences between the Credit Institutions and the Banks
There are several points of distinction between the credit institutions and the banks even if in essence both are almost the same. The differences may be enumerated as below:- As far as profit motives go the credit institutions are non-profit making organizations, whereas the banks are profit-making bodies.
The control of the bank rests with the shareholders of the banks and other paid officials who are supposed to look after such issues. In contrast the control of the credit union rests with the members.
- The credit unions are supposed to serve only their members; whereas the banks have a much larger customer base as in they can provide financial help to anyone.
- The banks normally work in a way to generate financial profits. In case of the credit unions they give more priority to the welfare of their members.
- The members or the beneficiaries of the credit unions who have invested in them at least up to a certain extent can have a certain portion of ownership in the credit union. On the other hand, in case of the banks the clients do not have any ownership rights in the banks.
- The profits of a credit union are provided to the members in case of the credit unions. The profits are normally provided as lower rates of interest, reduction in the service charges and increase in the rates of interest of the savings products offered by them. In case of the banks only a selected number of the shareholders receive the profits.
- In case of a credit institution the members have the right to choose a Board of Directors, which is supposed to look after their interests and operates on a voluntary basis. In case of banks the consumers have no advantages related to voting. The Board of Directors of the banks is paid and the directors normally look after the interests of the owners rather than the clients.
