With over 90 million members nationwide, U.S. credit unions have become an excellent alternative to banks. First of all, they offer similar products and services as banks. Then, credit unions offer better terms and conditions for loans. However, keep in mind that banks and credit unions have several fundamental differences. Read more about them to make a more educated choice. 

Credit unions are non-profit financial organizations. They are owned by their members who pool their assets in order to provide loans and other financial services to each other. In banks the customers are just customers. Typically, the bank is owned by shareholders who expect financial performance from the management team. The main aim of a bank (and of any other business) is to make profit.  

If all the customers own the credit union, then who runs the place? In fact, credit unions have the same management team as banks. It consists of a board of directors who makes decisions on credit union operations. The members of the board are elected. They are volunteers, and they typically work for free.

What does it take to become a member of a credit union? It depends on the credit union. They can’t offer their services to everybody. Instead, they are working with people who meet certain eligibility requirements, for example:

•    A person lives in a given geographic area 
•    A person is employed with a given company, hospital, college, school, industry, etc. 
•    A person is a member of an organization which have social, professional, ethnic or religious affiliations 

Nowadays credit unions can have more members than ten years ago. For example, a credit union established to serve a specific group of Americans within some geographic region can have more members now because more and more people are coming to live in this region. 

Credit unions typically offer the same financial products and services as banks. They take in deposits and grant loans with affordable repayments. But because they operate on a non-profit basis (and are generally exempt from taxes paid by banks), they tend to offer lower interest rates on loans and higher interest rates on deposits than banks. Earnings on savings accounts may be returned to members as dividends.

Some credit unions give different names for their financial products. For example, your saving account can be called a share because it represents ownership (like shares) in the credit union. 
Besides loans and savings accounts, credit unions may offer loan protection insurance, mortgages, funeral plan and debt management advice from qualified professionals. However, keep in mind that many of these services are only available at the large credit unions (personal loans and savings accounts are always available). 

Credit unions have their own federal deposit insurance, so your savings account is as safe as deposits in FDIC insured banks. The insurances have the similar quality. 

Credit unions have appeared to pursue more conservative lending policies than their banking counterparts, so they generally have avoided much of subprime and credit crises. People who want to borrow money need to prove that they can afford making monthly repayments. This helps to detect money problems at an early stage. 
What to choose – a credit union or a bank? Credit unions tend to focus on service over profitability, so their interest rates can be better than banks offer. A personal loan from a credit union can be repaid at any time without penalties. However, keep in mind that some credit unions do not offer a wide range of financial products and services. So if you are interested in some particular service, you will need to go to the bank.