What is a Credit Union?
A Credit Union is a member-owned, not-for-profit financial cooperatives or referred to as financial institutions that provide savings accounts, auto loans, mortgages, credit and other financial services to members.
Credit union membership is based on a common bond, a linkage shared by savers and borrowers who belong to a specific community, organization, religion or place of employment.
Credit unions pool their membership saving deposits and shares to finance their loan portfolios rather than rely on external capital.
How is a Credit Union Different than a Bank?
A credit union is a not-for-profit organization that exists to serve their membership rather than shareholders whom seek maximize profit through fees and services. Like banks, a credit union accept deposits, provides loans, and provide a wide array of other financial services.
But as member-owned institutions, credit unions focus on providing a safe place to save and borrow at reasonable rates by its members, for its members. Unlike banks, credit unions return surplus income to their members in the form of dividends.
The Credit Union’s Board of Directors, who are elected by the members, decide whom the credit union will serve.
In order to join a credit union, potential members must be part of a target demographic, which may be based on employment, community, place of residence, place of worship or membership in an association or organization.
Credit Unions serve members of modest means, many will actively expand their field of membership to serve other select groups or demographic when identified as needing access to affordable financial services.
Credit unions designated low-income predominately focus on providing financial services at reasonable rates in areas that are often under served or over leveraged by banks.
NCUA Share Insurance Coverage
Federally insured credit unions are insured by the National Share Insurance Fund (NCUSIF). The NCUSIF is operated by the National Credit Union Administration (NCUA), a federal government agency, backed by the full faith and credit of the United States government.
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 increased the maximum share insurance coverage at all federally insured credit unions to $250,000. Account balances in excess of $250,000 at a federally insured credit union can be fully insured if properly structured.
Credit Unions are financial institution dedicated to fulfilling the dreams of its members by its membership.