What is a credit union?

A credit union is characterized as a lending institution that is owned and operated by its members who share a common bond, such as living in the same community, working for the same employer, or belonging to the same organization. This member-based model distinguishes credit unions from traditional banks, which are typically for-profit entities owned by shareholders.

Because credit unions prioritize the needs of their members, they often offer favorable interest rates on loans and deposits, lower fees, and a more personalized banking experience. In contrast to a for-profit bank, which aims to generate profits for its shareholders, a credit union's profits are generally returned to its members in the form of dividends and better services.

This structure reinforces the community-oriented nature of credit unions, making option B the most accurate description of what a credit union is. Other choices do not correctly define a credit union, as they refer to different types of banking institutions or regulatory bodies.