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When looking for a financial partner to handle and store your money, there may be a variety of factors that go into your decision. Are you looking for accounts that will give you the highest returns on your funds? Or are you seeking guidance you can count on for the right loan options or to kickstart your small business?

No matter what you’re looking for, credit unions are an excellent option to choose as your financial institution. You’ll get the best of both worlds. You’ll enjoy fewer fees, better loan rates, and higher earnings averages, coupled with the peace of mind of working with an organization that stands by you throughout your financial journey.

What is a Credit Union?

A credit union is a not-for-profit financial institution, where members make up its customer base. As a member of a credit union, you are a partial owner and have a say in nominating the institution’s board of directors and other policies. A credit union is also a financial cooperative, meaning members’ accounts are pooled together and lead to improved services and higher earnings averages on savings accounts.

While a credit union is like a bank in that money is handled, stored, and saved, the differences between the two are significant. With a credit union, membership means ownership. Members have a voice in their credit unions, as opposed to shareholders who drive the decisions of banks. In other words, banks are for-profit organizations, while credit unions are not-for-profit.

The Credit Union Difference

With a credit union, you’re not a customer—you’re a member. We make it our goal to ensure you have all the tools and products you need to help you along your financial journey. Financial education is a core component of many credit unions. Here at American Heritage, we’re proud to offer a variety of monthly webinars on various financial topics, and we also publish new blogs each week.

Credit unions are also different when it comes to matters of community service. Communities represent so much of what credit unions stand for. Because of this, volunteerism and charitable donations and givebacks are at the heart of what credit unions do. In 2024, we proudly completed more than 3,000 community service volunteer hours and had more than 400 volunteers amongst our workforce.

While lower rates on loans and higher earnings averages help credit unions stand out, it’s the commitment to members and the local communities that stand in the center of the credit union difference.

How is a Credit Union Different from a Bank?

The main difference between a credit union and a bank is that a credit union is a not-for-profit financial cooperative. This is vastly different from banks, where profits are crucial. Credit unions still make profits, but instead of these funds going to shareholders, they are returned to members in the form of better rates on loans, higher earnings averages on savings accounts, and fewer fees.

It’s important to note that the Board of Directors are unpaid and represent the best interests of the membership. They will serve on the Board for a set term and will need to be re-elected, similar to political elections. Also, the folks that serve on the Board of Directors should truly believe in the organization’s mission and live the credit union philosophy of “People Helping People” every day!

Historically, credit unions have always aimed to help those who need it most. While the first credit union opened in 1908, significant progress was made in the 1920s during the Great Depression. Many Americans looked to credit unions for support during this particularly troubling time. This tradition continues today, where members can enjoy more favorable loan terms and less extensive requirements, so long as they meet membership requirements, such as living, working, or worshipping in a specific region or working for a Workplace Partner.

Ownership marks another difference between credit unions and banks. Shareholders drive the decisions of banks, with their eye towards turning a profit for themselves. With a credit union, the focus is on membership and ensuring they have the products and services they need to reach their financial goals.

Who Owns a Credit Union?

While the Board of Directors is important in guiding decisions, they don’t own or control the credit union. As a credit union member, you are a partial owner! Just like local and state elections, you’ll have a say in who is elected to the Board of Directors and can make your voice heard on credit union policies and decisions. Most credit unions will hold an annual meeting, which you are welcome to attend and allow your voice to be heard.

Credit Unions in the Community

The history of credit unions is one that shows consistent support for local communities and their memberships. In addition to support during the Great Depression, credit unions sold war bonds during World War II, leading to sales going towards the war effort that would amount to $5.7 billion today. Today, many credit unions give back to the local community through food drives, highway clean-ups, and charitable donations.

This community support is made possible through the passage of the Revenue Act of 1951, which granted credit unions (and other community organizations like churches) exemption from federal income tax. Of course, credit unions still pay billions annually in state and local taxes. But this federal tax exemption allows credit unions to operate as the community resource they were always designed to be, by helping those who need it most and making an impact in the communities they serve.

Why American Heritage?

While there are many excellent credit unions out there to join, American Heritage truly exhibits the credit union philosophy of “people helping people.” We’re proud to offer a variety of checking and savings account options to meet your short and long-term goals, as well as various loan products. We hold several annual community events and paid more than $104 million back to our members in dividends in 2024.

Explore our field of membership and how to become a member with us here.

Become a Member With Us

Here at American Heritage, we are always proud to welcome new members. If you want to enjoy all the benefits of credit union membership with a credit union who will support you throughout your financial journey, you can open an account with us here.