The Basics Between a Credit Union and a Bank
by Christina Bennett on August 11, 2010
in nashville attorney
It seems that at least half of my clients use credit unions without knowing how a credit union differs from a bank. Here is a very brief summary of the differences:
| CREDIT UNIONS | BANKS |
| - not for profit
- has “members” - there is some sort of mutual association between its “members” (examples include teachers, farmers, people living in a particular small town, etc.) - a member draws on his or her “share” in the union - a member issues a “share draft” to assign funds to a third party - the union is not FDIC insured - the union is not taxed - usually simpler banking principles and functions |
- for profit
- has “customers” - no relationship needed between the customers (i.e. anyone can obtain an account) - customer draws on his or her ”account” with the bank - customer issues a “check” to assign funds to a third party - the bank is FDIC insured - the bank is taxed by state and federal governments - the bank usually has very complex functions it can achieve |
For a discussion of the feud between credit unions and banks, I invite you to read Kathryn Reed Edge’s article “Feud is Alive and Raw for Banks and Credit Unions” in the Tennessee Bar Journal’s April 2010 Edition, pages 29-30.
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