What distinguishes a credit union from a traditional bank?

A distinguishing feature of credit unions is that they are member-owned financial cooperatives. This means that unlike traditional banks, which are typically for-profit entities owned by shareholders, credit unions are organized to serve their members. Members of a credit union have a say in how the institution is run and may benefit from lower fees and better interest rates because the primary goal of a credit union is to serve its members rather than to maximize profits.

This cooperative model creates a community-focused approach to banking, where profits can be returned to members in the form of improved services and lower costs. In contrast, the other options presented do not accurately characterize credit unions. They do not exclusively provide loans to businesses, nor are they for-profit organizations, and they typically have less stringent requirements regarding minimum balances compared to traditional banks.