What Is A Credit Union?
A credit union is a cooperative financial institution, owned and controlled by the people who use its services. These people are members.
Credit unions serve groups that share something in common, such as where they work, live, or go to church. Credit unions are not-for-profit, and exist to provide a safe, convenient place for members to save money and to get loans at reasonable rates.
Credit unions, like other financial institutions, are closely regulated.
And they operate in a very prudent manner. The National Credit Union Share Insurance Fund (NCUSIF), administered by the National Credit Union Administration, an agency of the federal government, insures deposits of credit union members at almost 9,000 federal and state-chartered credit unions nationwide.
Deposits are insured to at least $100,000.
The Credit Union Difference
What makes a credit union different from a bank or savings & loan?
Like credit unions, these financial institutions accept deposits and make loans--but unlike credit unions, they are in business to make a profit.
Banks and savings & loans are owned by groups of stockholders whose interests include earning a healthy return on their investments.
Credit unions exist only to serve their member-owners. Consumer surveys repeatedly show members are more satisfied with the service they receive from their credit union than are customers of banks or savings and loans. Credit unions are democratic organizations directed by their members.
Members have the power to direct credit union policy and, if dissatisfied, can even replace the board of directors. Credit unions practice a one-member, one-vote philosophy for all elections, unlike for-profit financial institutions whose stockholders vote according to the number of shares of stock they own.
Their not-for-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.
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