Who owns a credit union?
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.
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Who can join a credit union?
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.
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What's a Credit Union?
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 a profit.
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Are savings deposits insured?
Yes. Deposits in federally chartered and most state chartered credit unions are insured to $100,000 by the National Credit Union Credit Union Share Insurance Fund (NCUSIF), a U.S. government agency.
New regulations effective April 1, 2006 raise the maximum level of coverage for certain retirement accounts to $250,000. All other categories (Individual ownership, Joint ownership, Revocable Trust Accounts) remain at $100,000.
This is an important change in coverage as many people now have retirement accounts at two or more financial institutions in order to have full protection for their retirement savings. With the new $250,000 maximum, many will be able to consolidate their accounts in one credit union.
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