How do credit unions differ from commercial banks?

Credit unions are distinguished from commercial banks primarily by their structure and purpose. As not-for-profit financial cooperatives, credit unions are designed to serve their members rather than to generate profits. This means that any surplus earnings are typically returned to members in the form of lower fees, better interest rates on loans, and higher dividends on savings. This cooperative model fosters a community-oriented approach to banking, focusing on member service and support.

In contrast to credit unions, commercial banks operate as for-profit entities, seeking to maximize profits for their shareholders. They are not member-focused and do not offer the same cooperative benefits as credit unions. Additionally, credit unions generally have a member eligibility requirement that can be based on factors like community affiliation, employment, or membership in a specific organization, which is not a characteristic of commercial banks.

The option describing credit unions as focusing only on investment services is inaccurate, as credit unions provide a wide range of financial products including savings accounts, loans, and other financial services, similar to what banks offer. The mention of commercial banks as user-owned cooperatives is also misleading, as commercial banks are owned by shareholders rather than being cooperatively managed by users.