WebXam Finance Practice Test

Commercial banks are distinguished from credit unions primarily by their for-profit nature. Commercial banks aim to generate profit for their shareholders, which influences their operational strategies, fee structures, and interest rates. They typically offer a wide range of financial services, including loans, deposits, and investment products, and they operate with a focus on maximizing returns for their investors.

On the other hand, credit unions operate as non-profit organizations, prioritizing their members' financial well-being over shareholder profits. This often results in lower fees and better interest rates for members. While credit unions generally provide a range of financial services, it is the for-profit status of commercial banks that clearly sets them apart in terms of their primary business objective.

In contrast, credit unions are designed to serve their members, and they do accept deposits, which allows them to offer similar financial services as commercial banks, albeit often at more favorable terms for individuals. This highlights the importance of understanding the fundamental operational differences between these two types of financial institutions.