Definition
A member-owned, nonprofit financial cooperative offering the same core products as a bank: checking, savings, loans, and cards. Deposits are federally insured by the NCUA up to the same limits as FDIC coverage at banks.
Why it matters
Because profits return to members, credit unions often price loans lower and savings higher than large banks, with fewer fees. The trade-offs are membership requirements and smaller branch and technology footprints.
Example
On a $20,000 five-year auto loan, a credit union quotes 6.4% against a bank's 7.2%. That is about $8 a month, roughly $450 over the loan, for joining a cooperative the borrower was already eligible to join.
Related terms
This definition is educational, not financial, legal, or tax advice. U.S. rules and limits change; verify time-sensitive details with official sources. See our disclaimer.