What defines a credit union?

A credit union is defined as a member-owned financial institution. This structure means that the credit union exists to serve its members rather than to generate profits for shareholders. Members of the credit union typically share a common bond, such as belonging to the same organization, community, or profession, and they collectively own and control the credit union. This ownership aspect distinguishes credit unions from other types of financial institutions, as decisions are made to benefit the members rather than outside investors. Additionally, credit unions often provide services like loans and savings accounts with more favorable terms compared to traditional banks, and any profits earned are generally returned to members in the form of lower fees or better interest rates.