Credit union vs bank: who owns them and how they differ
By SendPay Business · · 2 min read
A credit union is a financial co-operative owned by its members. Members save together and lend to each other, and any surplus goes back to members. Most banks are companies owned by shareholders and run to make a profit.
How a credit union works
- People who share a common bond, such as living or working in an area, can join.
- Members put savings into the credit union.
- The credit union lends to other members, usually at capped interest rates.
- Any surplus can be paid back to savers as a dividend.
How they differ from banks
Credit unions are usually smaller, local and focused on savings and affordable loans. Banks offer a wider range of products, like business accounts, mortgages and international payments, and run to earn returns for shareholders.
Are savings protected?
In the UK, credit unions are regulated by the Prudential Regulation Authority and the Financial Conduct Authority, and eligible savings are covered by the FSCS up to its limit, in the same way as bank deposits.
Where SendPay fits
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This guide is general information, not legal or financial advice. SendPay Business is a technology company, not a bank, and does not take deposits; regulated services on the platforms are provided by licensed partners. PayPal, Patreon and Substack are named as reference points only and are not affiliated with SendPay Business.