Michigan Test for Teacher Certification (MTTC) Social Studies Practice Exam

Credit unions typically offer lower fees and better interest rates than commercial banks primarily because they operate as not-for-profit cooperatives. This structure means that credit unions are designed to serve their members rather than to generate profit for shareholders. As a result, any surplus generated from operations can be returned to members in the form of lower fees and more attractive interest rates on loans and savings accounts.

Unlike commercial banks, which aim to maximize profits for their investors, credit unions reinvest any excess revenue into providing better services for their members. This could include lower loan rates, higher savings rates, and minimal fees, which makes a significant difference in the overall financial service costs for individuals utilizing these institutions.

Furthermore, the cooperative model fosters a community-oriented approach, where members have a say in the governance of the credit union, which aligns the institution's goals with the financial wellbeing of its members. This emphasis on member benefits, rather than profits, is a key reason why credit unions can typically provide better financial conditions compared to commercial banks.