Definition
A not-for-profit financial cooperative owned by its members that offers accounts, loans and cards, often with lower fees.
What it means
A credit union works like a bank but is owned by its members. You usually join based on where you live, work, worship or study, or through a family member, and you become a part-owner with a small share deposit. Because credit unions are not-for-profit, they may offer lower loan rates or fees, although this varies. Savings at a federally insured credit union are protected by the National Credit Union Share Insurance Fund, run by the NCUA, up to $250,000 per member, per insured credit union, per ownership category, which matches FDIC coverage at banks. Accounts are called share accounts, and checking may be called a share draft account. Many credit unions belong to shared branch and ATM networks, so members can use locations beyond their own credit union.
Example
If a credit union charges 7.5% on a $20,000 car loan for 5 years and a bank charges 8.5%, the credit union payment is about $401 a month versus about $410, saving roughly $570 over the loan.
Illustrative numbers only. Your situation will differ.