FAQs
- Who owns a credit union?
- What is the purpose of a credit union?
- Who can join a credit union?
- What’s a Credit Union?
- How did credit unions start?
- Are savings deposits insured?
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.
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.
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.
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.
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.
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.
