Today, credit unions around the world are celebrating International Credit Union Day (ICU Day). Since 1948, on the third Thursday of every October, credit unions have celebrated a simple but radical idea—by working together, people can improve their financial well-being. This idea has spread across the world enabling credit unions to flourish, especially during times of economic hardship.
During the Great Depression, scores of ordinary Americans—farmers, teachers, small business owners—found themselves without access to banking services. They band together to become their own not-for-profit financial institution and credit unions began to open in record numbers. During the recent Great Recession, credit union memberships proliferated once again. Today there are more than 200 million credit union members worldwide—100 million of them in the U.S.
This year’s ICU Day theme, “people helping people,” is the foundational philosophy of the credit union movement. At its most basic level, a credit union is people pooling their money to provide each other with affordable loans—a credit union is literally people helping people. This is why Insight celebrates ICU Day. This simple idea empowers people, wherever they are in the world or in life, to take control of their own financial future.
So when we wish you a Happy ICU Day, know that we’re thanking you for belonging to a movement that’s helping your neighbors—and people around the world—grow and thrive and follow their dreams.
There are many differences between credit unions and banks, and sometimes it can be quite confusing. In fact, many people don’t realize the important differences between the two, which can directly impact their financial health. For instance, an individual who opens an account at a bank becomes a customer of that bank, while an individual who opens an account at a credit union becomes a member of that credit union. In general, credit unions promote the financial well-being of their members and are not-for-profit, while banks promote the organization’s bottom line and are for profit. Here are a few other differences you may not know about:
- CU: Credit unions are not-for-profit organizations that are owned directly by the members of the credit union.
- B: Banks are owned by investors/stockholders.
- CU: Credit unions are focused on helping their members.
- B: Banks are focused on generating a profit.
- CU: At a credit union, members reap the profit in the form of higher dividends on deposits, lower interest rates on loans, and fewer fees.
- B: At banks, any profit made by the bank goes to the owners or investors/stockholders.
- Decision Making
- CU: Credit unions elect their board of directors who represent the members of the credit union. Credit union boards are volunteer boards.
- B: Banks employ a board of trustees who is responsible for making decisions on behalf of the bank. The customers have no official say in decisions regarding the bank.
- CU: Credit unions charge lower fees and interest rates on loans than traditional financial institutions. Some credit unions even offer accounts with no fees. In addition, many credit unions offer low or no minimum balance requirements on checking and savings account with higher earnings on deposits
- B: Banks charge multiple monthly fees that can add up to hundreds of dollars annually. These fees include ATM fees and monthly fees on interest bearing accounts.
- Insured Savings
- CU: Credit unions are insured by the National Credit Union Administration (NCUA).
- B: Banks are insured by the Federal Deposit Insurance Corporation (FDIC).
- CU: In 1937, Congress voted to make credit unions exempt from paying federal income tax because they are not-for-profit organizations. Credit unions pay payroll, property and sales taxes.
- B: Banks pay federal income taxes.
We hope this helps everyone understand the important differences between credit unions and banks!