What is a Credit Union?

Do you know what a credit union is? If you don’t, you’re probably not alone. Maybe you’ve driven by one, have seen advertising, or know a friend or family member who is a credit union member. But what makes a credit union different, especially from a bank or other financial institution?

In this blog, we'll explore the credit union difference, the benefits of membership, and what the process of joining a credit union may look like.

1. So What is a Credit Union?

Simply put, a credit union is a not-for-profit financial institution. Credit unions consist of members (as opposed to customers) who can open deposit accounts, apply for loans, and use other financial services and resources as offered. The term cooperative is also used to describe credit unions, as funding comes from the members’ pooled accounts. Members also have a say in credit union matters, such as the annual meeting.

Community service is also a major area of focus for most credit unions. Associates from a credit union may volunteer time throughout the year for various local causes, whether it be for schools, animal shelters, healthcare organizations, or other not-for-profit or nonprofit organizations. Members are also often encouraged to support these causes.

At American Heritage Credit Union, community service is at the heart of everything. For instance, associates can volunteer for its Green Team and dedicate time each year to cleaning up local highways or organizing recycled donations. In 2025, American Heritage was fortunate to have 795 associate volunteers and complete more than 3,300 service hours.

2. Credit Unions vs. Banks

You may think that a credit union and a bank are both places to store money, open a checking account or savings account, and so on. And while you would technically be right, a lot of the similarities stop there. Aside from both being financial institutions, credit unions and banks are vastly different.

Here are some of the core differences between credit unions and banks:

• Credit unions have members, whereas banks have customers.
• You're a partial owner of your credit union as a member, whereas you're only a customer with a bank.
• Credit union board members are democratically elected by members, whereas banks have shareholders. The credit union's board of directors acts in the best interests of its members, as opposed to shareholders who seek to make a profit.

• Credit union profits are returned to members in the form of lower rates on loans, higher dividend rates, and more. With a bank, the profits are returned to the shareholders.

3. The Credit Union Difference

With a bank, it can be hard to feel like more than a typical customer. But with a credit union, the members and their best interests are at the heart of everything. As a financial cooperative, a credit union operates to serve its members and help them achieve financial milestones, whether that be buying a home, saving for college, or applying for a personal loan to go on a dream vacation.

Credit unions (as well as community banks) also make a significant impact in their respective communities in a variety of ways. Some may have associates dedicated time to a specific cause, whether it be focused on the environment, underprivileged families, or another, while others provide financial support to local community groups and organizations.

Financial education is also a core component of credit unions and their respective missions. Most credit unions will offer free financial education resources or tools in one form or another. For instance, American Heritage houses its Learning Center within its website, where members and non-members can use calculator tools to estimate loan payments, watch free webinars on a variety of topics, and read or listen to blogs.

4. Benefits of Credit Union Membership

Being a member of a credit union means so much more than simply having access to deposit accounts and loan products. With many credit unions, you can often take advantage of discounts on a variety of services, such as insurance, travel, and more. Credit unions also may partner with local attractions and amenities to offer discounted tickets on admission.

Member benefits are a major attraction of joining American Heritage. As a member, you have access to exclusive services and programs, such as My CU Home Connection®. This comprehensive program provides bundled realty and mortgage services for both homebuyers and sellers and comes with a variety of savings and discounts. Not every mortgage provider will offer an inclusive service like this, but you have access to it as an American Heritage member!

American Heritage also offers members discounts to family-friendly attractions, such as the Philadelphia Zoo, Morey’s Piers in Wildwood, New Jersey, Arden Theatre Company, and others. Members can also take advantage of discounts on rental cars, phone plans, and more. To view a complete list of member discounts with American Heritage, click here.

5. Becoming a Credit Union Member

Credit union membership is often open to a wide net of people, but some common characteristics need to be met to be eligible. While each credit union will vary in what they require for field of membership, you typically need to meet one of the criteria below to join:

• Live in the geographic area the credit union serves
• Work for a specific company or industry that is a partner or served by the credit union
• Have a household member or relative who is already a member of the credit union

• Belong to a particular religious organization, charity, or professional group that the credit union serves

The elements above all apply to joining American Heritage, though there are some additional ways individuals can join. This includes making a $5 donation to the nonprofit organization, the Kids-N-Hope Foundation. American Heritage also has an expansive network of Workplace Partners, and employees in each of these companies are eligible for membership.