Who Owns a Credit Union?
Many people are surprised to learn that credit unions are not-for-profit organizations. So, who owns a credit union? The answer is the members!
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What is a Credit Union?
A credit union is a non-profit financial institution that is owned and controlled by its members. Members are typically people who share a common bond, such as where they live, work, or go to school. Credit unions provide a safe place for members to save money and offer loans at reasonable rates.
There are nearly 5,000 credit unions in the United States, with over 100 million members. Credit unions are chartered by the federal government or by a state government. Federally chartered credit unions are regulated by the National Credit Union Administration (NCUA). State-chartered credit unions are regulated by the state in which they are chartered.
How are Credit Unions Organized?
Credit unions in the United States are cooperatives, owned and operated by their members. When you join a credit union, you become a shareholder—or an owner—of a unique financial institution. As a not-for-profit financial cooperative, earnings are returned to members in the form of higher dividends on savings, lower loan rates, expanded services, and more.
Who Can Join a Credit Union?
Each credit union has what’s known as a “field of membership” or “common bond” that defines who can join. For example, you may have to live, work, worship, or attend school in a certain area to be eligible. Some credit unions are open to anyone who joins a qualifying organization, such as the National Association for the Self-Employed or the American Consumer Council. Others are affiliated with employers, such as a particular company, labor union, or government agency. A few credit unions don’t have a common bond requirement at all and anyone can join.
Who Owns a Credit Union?
A credit union is a cooperative financial institution that is owned and controlled by its members. Unlike a bank, a credit union does not have shareholders. Its members are united by a common bond, such as where they live, work, or worship. Members elect a volunteer board of directors to represent them and make decisions about the credit union. Credit unions return earnings to their members in the form of lower loan rates, higher savings rates, and free or low-cost services.
What are the Benefits of Credit Unions?
Credit unions are not-for-profit organizations that are owned and controlled by their members. Unlike banks, which are in business to make a profit for their shareholders, credit unions return their profits to their members in the form of lower loan rates, higher interest on deposits, and lower fees.
Credit unions provide many of the same services as banks, but they differ in a few key ways:
– Member-owned and controlled: Credit unions are owned by their members, who have a say in how the credit union is run. Members elect a board of directors to represent them and set policies for the credit union.
– Not-for-profit: Credit unions do not have shareholders. Their profits are reinvested in the credit union or returned to members in the form of lower loan rates and higher interest on deposits.
– focus on service: Credit unions exist to serve their members, not to make a profit. They often offer lower fees and better rates than banks because they don’t have to generate profits for shareholders.
Are There Any Disadvantages to Credit Unions?
Credit unions generally offer lower fees and rates than banks, and many provide unique member benefits. However, there are a few potential disadvantages to consider before joining a credit union.
-Credit unions may not have all the features and services of a bank. If you need a service that your credit union doesn’t offer, you’ll have to go elsewhere to get it.
-Credit unions typically have fewer locations than banks. This can be an issue if you need to access your account while traveling or if you live in a rural area.
-Credit unions usually require members to maintain a higher balance than banks. This may not be an issue if you keep a lot of money in your account, but it could be if you have a low balance.
How Do I Find a Credit Union?
You might be surprised to learn that not-for-profit credit unions are actually owned by their members. That’s right, when you join a credit union, you become a part-owner of that financial institution. This unique ownership structure allows credit unions to return profits back to their members in the form of higher interest rates on deposits, lower fees, and other financial benefits.
So, how do you find a credit union that you can join? If you live or work in a particular community, you may be eligible to join a local credit union. Many credit unions also offer membership to individuals who belong to certain groups or organizations. For example, some credit unions serve only teachers, government employees, or members of the military. Others are open to anyone who lives or works in a specific geographic area.
You can use the Credit Union Locator tool on the website of the National Credit Union Administration (NCUA) to find credit unions that serve your community or offer membership to individuals who share your occupation, interests, or other factors. Simply enter your zip code and select the appropriate criteria, and the NCUA will provide a list of matching credit unions with contact information.