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 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.
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. Marys Cooperative Credit Association, a church-affiliated credit union opened its doors in 1909. Today, one in every three Americans is a credit union member.
Yes. All savings accounts are insured up to $250,000 by NCUA, the National Credit Union Administration, an agency of the Federal government.
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 doesnt 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 is to encourage members to save money and offer an affordable source of lending. 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 not-for-profit cooperatives. Rather than paying profits to stockholders, credit unions return earnings to members in the form of dividends or improved services.
A credit union exists to serve a specific group of people, such as a group of employees, individuals in the same profession 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.