Today is: 20/09/2019 06:32:09 AM

The difference between Banks and Credit Unions

Today, each credit union is an independent body owned by its members and registered under the Co-operative Societies Act and Regulations of Jamaica. This gives the credit union legal powers to operate.

The purpose of the credit union is for people to help each other with financial services at low cost of operation. Banks, on the other hand are in business to supply financial services to customers to make a profit for their shareholders.

Credit Unions have put, as a fundamental part of their philosophy, the priority of people helping people. They are providing the opportunity for the individual in need of a financial service to be a part owner of the business that will supply that need.

In credit unions any suplus achieved from operations is given back to the member, while in banks it goes to the shareholders; not the customers who actually use the services.

One of the major differences between credit unions and other financial institutions is that of membership. Members of credit unions own and democratically operate their own financial institutions. Members determine policies, elect officers, attend annual general meetings, and share in the surplus.

In banks, individuals with the largest amount of shares have the greatest control of power. Therefore, the more shares; the more power to influence policy.

Regardless of account balances, members of the credit union are only entitled to one vote and benefit directly from the services of their own credit union.