What is a primary characteristic of credit unions?

Credit unions are primarily characterized by their member ownership structure, which differentiates them from other financial institutions. Unlike banks, which are for-profit entities owned by shareholders, credit unions are not-for-profit cooperatives owned and operated by their members. This means that the people who use the credit union's services—such as saving and borrowing—are also the same individuals who own it.

The member-centric model allows credit unions to often provide more favorable terms, such as lower interest rates on loans and higher savings rates compared to traditional banks. Members typically join credit unions based on a common bond, such as employment, geographic location, or community affiliation, which fosters a sense of community and mutual assistance. Thus, members often loan to one another, further emphasizing the cooperative and supportive nature of credit unions.

This structure is critical in understanding how credit unions operate and their primary distinction within the financial system. The other choices do not accurately reflect the core attributes of credit unions; they are not for-profit institutions, they do not typically charge higher interest on loans compared to banks, and they are not regulated by the SEC, but rather by the National Credit Union Administration (NCUA) or state-level regulatory bodies.