What defines a credit union?

A credit union is defined as a member-owned cooperative, which means it is owned and operated by its members for their mutual benefit. Unlike traditional banks that aim to make a profit for shareholders, credit unions strive to provide better services, lower fees, and higher interest rates for their members. This cooperative structure allows members to have a say in how the institution is run, often giving them a voice in decisions like board elections and policy changes.

The cooperative nature of credit unions fosters a community-oriented approach to banking, where the focus is on serving members rather than maximizing profits. This typically results in a strong emphasis on customer service and member satisfaction.

The other options represent different types of financial institutions or formats that do not align with the fundamental characteristics of credit unions. For example, for-profit financial institutions prioritize profit for shareholders rather than member benefit. Governmental agencies typically deal with public loan initiatives and assistance programs rather than providing a range of financial services like credit unions. Lastly, banks that operate online only are still for-profit entities, which goes against the core principle of credit unions being member-owned cooperatives.