A bank is a for-profit organization.
Banks hold deposits, make loans, pay checks, and provide other related services for the public.
They collect funds from three sources: demand, savings, and time deposits; short-term borrowings from other banks; and equity capital.
A credit union is a not-for-profit financial cooperative that makes personal loans and offers other consumer banking services to individuals sharing a common bond or affiliation, such as a common employer.
Because credit unions operate as not-for-profit institutions, they are exempt from both federal and local taxes.
Consequently, credit unions can charge below-market rates on loans while paying higher rates to savers.
A credit union gets its operating funds from shares purchased by individual owners, who are members.
It also pays dividends (representing the payment of interest) out of earnings.