How do credit unions differ from commercial banks in terms of operation?

Credit unions operate as nonprofit organizations, which is a fundamental distinction from commercial banks that are typically for-profit entities. This nonprofit status means that credit unions are owned by their members rather than shareholders. The profits generated by credit unions are reinvested back into the services they provide for members, often resulting in lower fees and better interest rates on loans. Because credit unions prioritize the needs of their members over profit generation, they can create a more community-focused financial environment.

Other choices don’t align with the nonprofit nature of credit unions. For instance, while commercial banks aim to maximize profits, credit unions exist primarily to serve their members' financial interests. Furthermore, the number of branches and the interest rates offered can vary widely between individual credit unions and commercial banks, but this does not define their core operational differences. The emphasis on nonprofit operation underscores the member-oriented mission of credit unions.