What type of organization is a credit union?

A credit union is best defined as a democratically owned and controlled nonprofit financial cooperative. This means that it is structured to serve its members rather than to generate profit for external shareholders. Members of a credit union are its owners, and they typically join based on a common bond, such as being part of the same community, profession, or other group.

This member-centric model allows credit unions to offer services such as loans and savings accounts at better rates and terms than traditional banks. Decisions regarding policies and governance are made collectively by the members, which aligns with the cooperative principles of democratic member control and member economic participation.

While elements like for-profit institutions or government-run banks may serve some functions in the financial landscape, they do not embody the cooperative nature of credit unions, which prioritize member benefits and community involvement over profit generation.