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 member of a credit union 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 deposits
insured?
Yes. All share accounts are insured up to $250,000 by the
National Credit Union Share Insurance Fund (NCUSIF). Learn
more about share insurance.
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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. Learn more
about membership eligibility.
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