At their most basic aspects, banks and credit unions appear to be very similar. At both institutions you can cash a check, drive up to a window and speak with a Teller, and inquire about things like loans or mortgages. Credit unions and banks both provide financial services. However, when you look beneath the surface you’ll find that banks and credit unions are quite different.
First and foremost, banks are for-profit businesses. At St. Cloud Federal Credit Union, we offer banking services, but are a not-for-profit financial cooperative.
Any profit generated by the credit union is returned to its members. This can help keep fees and loan rates lower, and savings rates higher. Our emphasis is, and always has been, on superior Member Service. A bank’s profit goes back to its investors, not customers. At a bank, you’re a customer, at a credit union you’re part owner, and a Member of our institution.
Banks are owned by private or public investors. To these investors, a bank is a way to make a return on their investment. St. Cloud Federal Credit Union (like other Credit Unions) is owned by its Members. We are a “financial cooperative” that consists of individuals with a common affiliation. In our case, that affiliation is geographic.
Banks are run by officers and directors (chosen by bank owners), who are legally bound to make decisions in the interest of the stockholders. Many of these officers and directors are located out-of-state and customarily receive director fees, per diem, stock options, and other perks. Similar to the banking industry, credit unions are governed by a board of directors. This board consists of oversight committees and volunteers who are Members elected by other Members. Because our board of directors are not stockholders, they receive no compensation for their commitment and service. Because we don’t have stockholders, our mission and goal is to satisfy and keep Members happy.