What’s a Credit
Union?
A credit union is a cooperative, not-for-profit
financial institution organized to promote thrift and
provide credit to members. It is member-owned and
controlled through a board of directors elected by the
membership. The board serves on a volunteer basis and
may hire a management team to run the credit union. The
board also establishes and revises policy, sets dividend
and loan rates, and directs certain operations. The
result: members are provided with a safe, convenient
place to save and borrow at reasonable rates at an
institution which exists to benefit them, not to make a
profit.
Who owns a credit union?
Most financial institutions are owned by stockholders,
who own a part of the institution and intend on making
money from their investment. A credit union doesn't
operate in that manner. Rather, each credit union member
owns one "share" of the organization. The user
of credit union services is also an owner, and is even
entitled to vote on important issues, such as the
election of member representatives to serve on the board
of directors.
How did credit unions
start?
The first credit union cooperatives started in Germany
over a century ago. Today, credit unions are found
everywhere in the world. The credit union movement
started in this country in Manchester, New Hampshire.
There, the St. Mary's Cooperative Credit Association, a
church-affiliated credit union, opened its doors in
1909. Today, one in every three Americans is a credit
union member.
What is the purpose of a
credit union?
The primary purpose in furthering their goal of service
is to encourage members to save money. Another purpose
is to offer loans to members. In fact, credit unions
have traditionally made loans to people of ordinary
means. Credit unions can charge lower rates for loans
(as well as pay higher dividends on savings) because
they are nonprofit cooperatives. Rather than paying
profits to stockholders, credit unions return earnings
to members in the form of dividends or improved
services.
Are savings deposits
insured?
Yes. All savings accounts are insured up to $250,000 by
the NCUA, the National Credit Union Administration, an
agency of the federal government.
Who can join a credit
union?
A credit union exists to serve a specific group of
people, such as a group of employees or the members of a
professional or religious group. This is called a
"field of membership." The field of membership
may include where they live, where they work, or their
membership in a social or economic group.
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