Credit unions operate on a core principle of shared ownership.

  • Member Deposits: Members pool their funds mainly by share accounts. These deposits serve as the credit union’s capital base.
  • Loans: Members can then borrow from this pool of funds to finance various needs. Credit unions typically offer competitive interest rates on loans compared to traditional banks.
  • Profit Sharing: Any surplus income generated by the credit union (interest earned on loans minus operating expenses) is returned to members in the form of dividends based on shares or improvements to member services.

Essentially, credit unions function as a self-contained financial ecosystem where members’ deposits fuel loans for other members, and any resulting profits are reinvested for their benefit.