About Credit Unions

The credit union movement began with a simple idea – that people could achieve a better standard of living for themselves and others by pooling their savings and making loans to neighbors and co-workers. The philosophy of the credit union movement is “Not for Profit, Not for Charity, But for Service.”

Credit unions promote thrift and teach the wise use of credit. They encourage their members to develop a systematic savings program, and they provide a source of low-cost credit. Because credit unions are not-for-profit and have low overhead costs, they are usually able to offer lower interest rates on loans and higher dividends on members’ shares (savings). A credit union is also non-profit in the sense that its purpose is to serve the members, not to make money. It needs money to provide services and benefits. But money is the means, not the end.

Credit unions are safe and sound places to bank. Every credit union is regulated and examined consistently by the National Credit Union Administration (NCUA) the U.S. government agency, or a state credit union government agency, ensuring the safety and soundness of its operations. And, just like the FDIC, the NCUA insures credit union deposits up to at least $250,000.

Credit unions today are thriving, with more than 100 million credit union members across the country.

For more information about credit unions, visit A Smarter Choice website.

What is a credit union?

A credit union is a member-owned, not-for-profit financial cooperative financial institution owned and operated by its members. These members, who are united by a common bond of association, democratically operate the credit union under state and federal regulation. There are more than 7,600 credit unions in the United States, serving more than 100 million members.

What are the benefits of credit union membership?

Credit unions exist solely for the purpose of meeting the financial needs of their member-owners. To that end, credit unions not only provide outstanding personal service, but members often earn higher returns on their savings while paying lower rates for loans. Each year, credit unions consistently outshine other financial, and savings and loan (S&L) institutions in the area of consumer/member satisfaction. Credit unions are based on a one-member, one-vote structure, thus giving members the power to direct credit union policy in an effort to meet member needs. This structure is vastly different from the for-profit sector where stockholders vote according to the number of shares of stock they own. Their non-profit status enables credit unions to operate at a lower cost than many for-profit institutions and helps them to offer competitive loan and savings rates. For instance, credit unions usually charge lower interest on credit cards than most other providers, and many credit unions charge no annual card fee.

Who can join a credit union?

Credit union members generally share a common bond such as occupation (same employment or line of work), residence (live or work in the same area), association (same church, professional, civic or fraternal group or belong to a particular labor union) and family (membership is extended to any member’s immediate family). Federal and state credit union laws restrict credit unions to serving only the groups specified in their charters. The group or groups served by a credit union are referred to as its field of membership (FOM). In recent years, a broader interpretation of common bond has enabled credit unions to extend their services to more consumers. Find a credit union in your area.

What makes credit unions unique?

The biggest difference between credit unions and other financial institutions is that the members are owners. Credit unions exist solely to serve their member-owners, who are the only depositors. The benefits of ownership are returned to the member in the form of lower loan rates, higher dividends on savings and personal service.

What services do credit unions offer?

Credit unions offer a wide array of services each designed to meet the particular needs of that credit unions member-owners. They can range from a “plain vanilla” credit union that only offers shares (deposits) and loans, to a full-service credit union that serves as its members’ primary financial institution. Some credit unions also offer certificates of deposit, financial planning, individual retirement accounts (IRAs), mutual funds, new and used auto loans, signature loans, home equity loans, home mortgage loans, small business loans, share drafts (checking accounts), credit cards and ATM and debit cards