Which of the following describes credit unions?

Which of the following describes credit unions?

• A. For-profit financial institutions
• B. Non-profit financial institutions based on membership criteria
• C. Private equity firms providing loans
• D. Banks that only serve high-income clients

Answer: (B)

Credit unions are best described as non-profit financial institutions that operate based on membership criteria. They are community-focused entities that serve specific groups of people who share a common bond, such as working for the same employer, belonging to the same organization, or residing in a particular geographic area. Unlike for-profit banks that aim to maximize shareholder profits, credit unions reinvest any surplus income back into the institution to benefit their members, often leading to better interest rates on loans and savings, as well as lower fees. This structure allows credit unions to prioritize their members' needs and foster a sense of community and mutual assistance.

Credit unions are best described as non-profit financial institutions that operate based on membership criteria. They are community-focused entities that serve specific groups of people who share a common bond, such as working for the same employer, belonging to the same organization, or residing in a particular geographic area. Unlike for-profit banks that aim to maximize shareholder profits, credit unions reinvest any surplus income back into the institution to benefit their members, often leading to better interest rates on loans and savings, as well as lower fees. This structure allows credit unions to prioritize their members' needs and foster a sense of community and mutual assistance.