Difference Between Credit Union and Bank (With Table)

If someone wants to make a decision about where he will do his banking then he has two choices. A credit union or any usual bank. Both these terms are financial institutions that offer quite similar services like- taking loans, checking or savings accounts, etc. Their goal is to save your funds from unnecessary spending, but their inner forms are different.

Credit Union vs Bank

The main difference between credit union and bank lies in the fact of how they operate. In a credit union, its members are called ‘customers’ and they are the owners. But a bank is like a company and they want to make strategies to expand their profit for the shareholders.

In the financial industry, credit unions are unified together and maximizing profit is not their aim. On the other hand, banks concentrate on profit the most.

To gain the profit, banks offer commercial loans and savings account that will increase the earning.

Comparison Table Between Credit Union and Bank

Parameter of Comparison

Credit Union



A credit union can be called a financial team that gives conventional banking services.

A bank can be called a financial company that has a license to make loans and accept deposits.


Credit unions are not interested to make profits.

Banks are always interested to make profits.


Credit unions are ruled by a specific board made of recent members.

Banks have board directors who get paid.


Credit unions mainly work in local areas.

For the bank, there is no specific area.


Credit unions’ service is for a certain kind of group.

A bank account can be opened by anyone, meaning their service is not for only a specific group.

What is a Credit Union?

It is already mentioned
above that a credit union is a financial organization that has no desire to
gain profits. In theory, it is a financial united institution that has members
also known as account holders.

They seem to carry a
unique connection. For example- their employer seems to be the same. Credit
unions perform based on specific communities and operated by equal
participation of all the stakeholders in decision making.

They have a board and any member of credit unions are welcome to join as directors. Their asset level is not an issue in this case. Credit unions want their customers or members to participate in every decision they make for the future.

As mentioned before
credit unions are a nonprofit based organization. That means whatever the
earning rate is it will go back directly to its “customers” (members) in
low-interest rates and there won’t be any profit hunt of any kind.

Their services are very similar to banks. Such as- checking or savings accounts and mortgages. And there are plenty of noticeable friendly rates and needs in credit unions.

Among many services provided by credit unions, schooling and financial counseling are also included. All these are possible because credit unions have fewer members than other banks.

As a result, their
members are capable of focusing a lot in order to make positive changes. Also,
credit unions get this benefit of not paying any kind of income tax as they
have a nonprofit agenda.

What is Bank?

Bank’s most important agenda is gaining profit and maximizing it as much as possible. Unlike credit unions, banks customers have no authority over the bank, they are not the owner and they are not allowed to participate in any kind of decision making.

Those who invest in a bank are the owner. And their only concern is expanding profit and to satisfy the stakeholders. In a bank, every decision and policy that has to make are taken by the investors and the stakeholders.

Here customers of the
bank are not allowed to get selected for the board and also they have no right
to vote. There is always rivalry going on among banks and as a result, they
cannot work together or share any sorts of basics.

In spite of many reasons, there are still so many benefits a bank can provide to its customers. For example- sometimes it’s possible to find only one branch of a credit union in a city, whereas banks have larger numbers in the matter of branches.

And this number brings a significant change in people’s lives. Whenever a customer needs to withdraw money they can easily reach the nearest branch of their bank and this opportunity makes their task easy in so many ways.

Main Differences Between Credit Union and Bank

  1. In finance, credit unions are known to be
    an institution and they have members who are the owner with the power to make
    all the decisions. Whereas, banks have shareholders who make all the decisions
    in interest to expand their profit rate.

  2. In credit unions, one has to join first to
    be considered a legal member and these members can be selected by vote to have
    a seat on the board. On the other hand, banks don’t have this sort of member.
    They have customers who have no authority whatsoever.

  3. As earlier mentioned, credit unions are
    non-profit based companies, meaning they don’t have to go through the hassle of
    paying any kind of official income taxes. And banks are profit-based
    institutions, meaning they have to pay corporate income taxes which may involve
    paying higher fees later.

  4. In credit unions, members have all the
    authority. That’s why usually credit unions take lesser service fees from
    members. On the other hand, because of banks’ profit-based system, they take
    higher service fees.


If anyone wants to decide between these two financial organizations then he or she should consider facts, like- their customized requirements, interests, etc. To many users, the credit union is a right pick, and for many, a bank seems more appropriate.

Both these terms have advantages and cost rates, that’s why to choose wisely people need to know their definitions and differences. This will give us the chance to be more confident and to enjoy what these financial entities are offering.


  1. https://www.sciencedirect.com/science/article/pii/S0165176501003652
  2. https://anserj.ca/index.php/cjnser/article/viewFile/236/142