A credit union is a financial institution. Similar to other financial institution a credit union can offer a wide range of products and services such as savings (regular shares), checking (share draft), certificate of deposits (share term certificates), loan products, and much more. Other than the name of the products, there is not much of a difference between products by a credit union and a bank. So, what makes a credit union different from other financial institution?

A Defined Field of Membership

A credit union has a field of membership and not everyone can simply walk up and open an account. Mattel Federal Credit Union serves the employees of Mattel, Fisher-Price, and American Girl. In addition the field of membership includes immediate families of members. Other credit unions have membership defined by a geographical area such as a city or county and others by specialized vocation such as healthcare professionals.

Anyone outside the field of membership may not become a member, but once you are a member you will always be a member even if you no longer within the field of membership.

Member Owned, Not-for-Profit

A credit union is a cooperative wherein its members are its owners. The general membership is represented by an elected board of directors who are members themselves and serves without compensation for their time. Each member, regardless of their balances on their accounts, gets to cast one vote and are eligible to be nominated as a director.

Unlike for-profit financial institution the main focus of a credit union as an institution is not profit. Its main focus is to ensure its financial stability and sustain its growth to continually provide financial products and services to its members. In the process of doing business the credit union does make a profit, however a credit union's profit does not go into the pocket of shareholders or select individuals. It goes back to the credit union in the form of capital to further its stability as an institution, to new products and services, or back to the general membership in the form of higher dividends, lower loan rates, and lower fees.