What’s a Credit Union?

A credit union is a not-for-profit financial cooperative owned and operated by its members. Credit unions use the savings deposited by their members in order to fund loans to other members. In contrast, banks largely use money from stockholders to generate a profit and therefore provide an income to those investors. This difference provides credit union members with great financial advantages.

Without the need to generate profits for stockholders, credit unions do not need to generate large amounts of income to operate. As a result, credit unions are able to offer members lower loan rates and return extra income back to the members in the form of higher savings dividends (referred to as “interest” at banks). Many common banking fees and service costs are eliminated or reduced.

Unlike traditional banks, credit unions are restricted in those they can serve. Each credit union has a distinct Charter listing those eligible to join. Credit unions serve individuals with a common affiliation and are usually demographically defined. For example, credit unions can serve the employees of specific companies, individuals residing in specific counties or zip codes, or members of an association.

Credit unions are regulated by the National Credit Union Administration (NCUA), an independent government agency. All members accounts are insured up to at least $250,000 by NCUA.

Switch from being a bank customer and enjoy the benefits of a being a credit union member!