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A financial institution is an organization that lends, borrows, and protects money for individuals and companies. The most commonly known institutions are banks and credit unions.

Credit Unions

A credit union is a non-profit financial institution that is owned and operated by its members. As a non-profit institution, credit unions are known to provide their members with lower rates on services such as savings and loans and/or higher returns on the money they deposit.

Banks

Banks come in many varieties, including community, regional and money center banks and holding companies, as well as savings institutions, trust companies, and savings banks.

Credit unions and banks offer many of the same services, including the following:

Checking accounts

Direct deposit and automatic payments

Car and home loans

Safe deposit boxes

Transfer of money

Overdraft checking

Traveler's checks

Credit cards

Debit/check cards

ATMs

Advantage to Using Financial Institution Services

By keeping your money in a financial institution you’re less likely to spend it, it is protected, and it earns interest. (See more on interest in the Savings and Credit Card lessons.)

By putting money in a financial institution like a bank or credit union, you “lend” your money to them. The credit union uses money to lend to other people who need to buy things that they don’t have enough money for houses and cars. The institution keeps track of your money and will give it to you whenever you need it.

Quick Facts

Credit unions are formed on the basis of a common relationship (bond) such as employer, membership or geographic region. For example, part of Deseret First Credit Union’s common bond is LDS Church membership or employment.

More than 84 million U.S. consumers are member-owners of, and receive all or part of their financial services from the nation's 9,750 credit unions. – Credit Union National Association

Surveys consistently rank credit unions first among financial institutions in consumer satisfaction. – Credit Union National Association



About the Author:
Kris Mecham has been our President and CEO since July 1, 1991. He enjoys family, farming, waterskiing, and golf.