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
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.
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.
Yes. All savings accounts are insured up to $100,000 by the NCUA,
the National Credit Union Administration, an agency of the federal
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.