What is the difference between a credit union and a commercial bank?

What is the difference between a credit union and a commercial bank Introduction: The World of Financial Institutions Before diving into the specifics, let's understand the broader landscape of financial institutions. When it comes to managing money, two popular options are credit unions and commercial banks. While both serve as repositories for funds, their structures, operations, and objectives differ significantly. Ownership and Structure: Member-driven vs Shareholder-driven One of the fundamental distinctions between credit unions and commercial banks lies in their ownership and structure. Credit unions are member-owned, meaning the individuals who deposit money in the union become its members and, in turn, owners. On the other hand, commercial banks are shareholder-driven entities, with investors holding shares in the bank. This distinction often influences the decision-making process and the overall focus of the institution. Profit Motive: Serving the Members vs Maximizing Shareholder Value Another key difference stems from the profit motive. Credit unions, being member-driven, prioritize serving their members' financial needs. They aim to provide competitive interest rates on loans and offer attractive savings options. In contrast, commercial banks, as profit-oriented entities, focus on maximizing shareholder value. This objective often leads to a range of services, such as investment banking, that credit unions may not offer.