Both types of institutions make money by lending money at higher interest rates than they pay out on deposits, as well as through fees. The key difference between banks and credit unions is that credit unions are not-for-profit organizations owned and controlled by their customers, known as “members.”1 The primary goal of credit unions is to promote the financial welfare of and return profits to their members.
In contrast, banks are for-profit organizations owned and run by shareholders.2 Those investors might be thousands of anonymous stockholders or a few large investors, depending on the bank. The main motive of banks is to maximize profits for these shareholders.