Frequently Asked Questions
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.
The Members own the 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 (initial deposit in Membership Savings account), making them an owner. Member/Owners are entitled to vote on important issues, such as the election of member representatives to serve on the board of directors.
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.
The philosophy of the credit union movement is Not for Profit, Not for Charity, But for Service. The primary purpose in service is to encourage members to save money. Another purpose is to offer fairly-priced, low cost credit 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 higher dividends, lower cost credit and new & improved services.
Savings are insured up to $250,000 by the National Credit Union Administration (NCUA), an agency of the federal government.
A credit union exists to serve a specific field of membership as defined by its charter. Anyone who falls within the common bond of the credit union may join and share in its ownership. A common bond can be defined as the employees of a company, members of a civic or church group, residents of a community, or members of social or economic groups. Often, a Member's immediate family, by blood or marriage, may also join.