What is a Credit Union A credit union is a member-owned financial cooperative between people who share a common bond, such as employer, an association, or a community group. They join together in a not-for-profit organization for the purpose of doing business with one another. They save their money in a common fund, borrow against those funds with low-cost loans and receive other financial services at little or no cost. When you open an account at a credit union, you become one of the owners of a cooperative institution, and as such you are entitled to a say in how the credit union is run. Members earn dividends on their savings and checking accounts. After expenses and required reserves are met, the earnings of the credit union are returned to the members in the form of dividends. Credit unions are usually able to offer higher dividends on savings and lower rates on loans and other services than other financial institutions may be able to do because credit union financial return is used for the benefit of the membership. Credit unions are not credit bureaus, labor unions, loan companies or finance houses. They are financial institutions incorporated under state or federal laws to provide services to their members.