What is a Credit Union?

A credit union is a not-for-profit financial institution. Like a bank, it offers checking and savings accounts, provides car and home loans, issues credit cards, and offers other financial services. But there are key differences between the banks and credit unions.
 
Investors own a bank, so it must deliver a profit to its shareholders. (Those shareholders aren’t necessarily customers of the bank.)
 
A credit union is owned by its members (customers). Profits don’t go to outside investors. They benefit members in the form of reduced fees, for example, and lower interest rates on loans.
 
A credit union is a financial cooperative. The underlying idea is that members pool their money to help one another. Some members make deposits, allowing other members to take out home loans.
 
A credit union’s top priority is helping members build their financial security. They offer financial education to members, hold community events and offer loans with better terms than you might find at a traditional bank.
 
Learn more about the differences between a credit unions and banks.

What does it mean to be member-owned?

When you join a credit union, deposits you make into your checking or savings account are “shares.” Your shares make you a partial owner of the credit union.
 
That’s why credit unions sometimes refer to checking accounts as “share draft accounts,” while savings accounts are “share savings accounts.” These accounts may have unfamiliar names, but they work just like standard checking or savings accounts at a bank.
 
At a credit union, though, members have a voice in how the credit union operates. Members vote to elect volunteer board members, who manage the credit union. The board’s job is to make decisions that help members thrive financially. (Bank customers don’t have any say in how their bank is run. The bank’s investors make the decisions.)
 
Also, a credit union’s profits are passed along to members (unlike at a bank, where outside investors get a cut of the earnings). Those profits get reinvested so the credit union can lower the fees that members pay, offer higher-yield savings accounts and provide loans with great rates.

Are credit unions nonprofit?

Yes, credit unions are nonprofit. Rather than giving shareholders a cut of their profits, they reinvest that money back into the organization. Nonprofits are committed to a social cause, and their board has a fiscal responsibility to realize that mission.
 
Credit unions are technically not-for-profit entities. Unlike other nonprofits, which broadly serve the public good, not-for-profits tend to be smaller organizations and serve their own members. Credit unions often serve a specific group, such as members of a particular trade or profession, or people who live in the same geographic area.

How do credit unions work?

Credit unions are not-for-profit entities, owned by their members, and they put their members’ financial wellbeing first. A credit union’s profits benefit members in the form of financial education, reduced fees, lower loan rates and higher interest rates on savings accounts.

Once a member, always a member

When you join a credit union, you usually remain a member for life – even if you change cities – as long as you maintain your membership and obey the bylaws.

Are credit unions insured?

Yes, credit union members are insured up to $250,000 for each type of account by the National Credit Union Association (NCUA). Traditional banks are insured by the Federal Deposit Insurance Corporation (FDIC).
 
Some credit unions are chartered by the National Credit Union Administration, while others are chartered by a state agency. But all credit unions are insured by the NCUA.

How to join a credit union

Each credit union has its own eligibility requirements. To join, you may need to work in a particular industry, work for a specific employer, serve in the military or live in a specific geographic area. Some credit unions welcome more than one group, such as employees of a specific company as well as residents of the local community.
 
The good news is that 99% of people qualify to join at least one credit union, according to the Credit Union National Association. To find options near you, use the National Credit Union Administration’s credit union locator.
 
Many credit unions allow you to apply online. To join, you’ll need to gather some documents such as a government-issued ID, a second form of ID, your Social Security number and a bill showing your name and address. You’ll also need to pay a membership fee, which usually ranges from $5 to $25.
 

How to join Patelco Credit Union

 
Patelco, located in Northern California, is one of the largest credit unions in the state. Patelco membership is free, and almost anyone in California is eligible to join – learn more and join today.

 

 
Sources:
 
US Chamber of Commerce, “Banks vs. Credit Unions: What’s the Difference?” accessed May 29, 2025.
 
MyCreditUnion.gov, “What is a Credit Union?” accessed May 29, 2025.
 
Consumer Financial Protection Bureau, “What is a credit union share draft account? Is it a checking account?” August 30, 2024.
 
SmartAsset, “What Is a Share Savings Account?” April 16, 2025.
 
Experian, “What Is a Credit Union?” accessed May 29, 2025.
 
US Chamber of Commerce, “Nonprofit vs. Not-for-Profit vs. For-Profit: What’s the Difference?” accessed May 30, 2025.
 
Experian, “How to Join a Credit Union,” November 6, 2021.
 
US News & World Report, “10 Things to Know About Credit Unions,” April 8, 2025.
 

 
This article was created in accordance with the Patelco editorial policy.