What is a credit union?
October 30th, 2013
A credit union is a cooperative financial institution designed around the people who use it. Credit unions are not-for-profit, therefore, any surplus income the credit union earns is returned to its members. Credit union leadership consists of elected, volunteer members.
Credit unions are sometimes confused with banks, but the two are not the same. Banks are for-profit institutions that are owned by stockholders. The stockholders choose and pay their board of directors, based on the bank’s profits. Not all customers have a voice in their bank.
Credit unions are based around democracy; each member has a voice and a vote. Credit unions are owned by the members. A group of volunteers serve as the board of directors and in other key areas of leadership. The board is not paid, and serves to act in the best interest of the credit union and its members. The board helps in directing the best path for the members of the credit union.
Credit unions are also different from banks when it comes to membership. Anyone can become a customer of a bank, but this is not true when it comes to credit unions. Credit unions are built around a group of people with a common bond, whether it is a community, involvement with an organization, or common work trade.
All federal-chartered and most state-chartered credit unions are insured by the National Credit Union Share Insurance Fund (NCUSIF) for up to $250,000 per member. Members can rest assured that their money is safe with their credit union.