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22

Sep

Credit unions aren’t banks: Here’s how they differ

Jamie Young, Providence Journal

Although operated cooperatively as not-for-profits, credit unions should not be confused with nonprofit charities. Because one thing’s for sure: Credit unions make money. Here’s how.

As financial institutions, credit unions generate what’s considered a profit in economic terms — which is needed to create a surplus in order to continue to operate and generate further profit for their members. The key is that the surplus is passed along to members in the form of higher returns on their savings and deposits — and lower interest rates on their loans when they need to borrow money.

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