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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.
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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.
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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.
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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.
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Are
savings deposits insured?
Yes. All savings accounts are insured up to $100,000 by the
NCUA, the National Credit Union Administration, an agency
of the federal government.
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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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