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What Is a Credit Union?
A credit union is a cooperative financial institution, owned and controlled by the people who use its services. These people are known as members. Credit unions serve groups of members that share something in common, such as where they work, live, or go to church. A credit union is formed for the purpose of encouraging savings, to make loans at competitively low interest rates to members and providing other financial services. There are more than 8,000 credit unions in the United States with nearly 90 million credit union members nationwide.
Why Would I Want To Be a Member?
What makes a credit union different from a bank or savings and loan? Like credit unions, these financial institutions accept deposits and make loans–but unlike credit unions, they are in business to make a profit. Banks and savings and loans are owned by groups of stockholders whose interests include earning a healthy return on their investments. Credit unions exist only to serve their member-owners.
Consumer surveys repeatedly show members are more satisfied with the service they receive from their credit union than are customers of banks or savings and loans. Credit unions are democratic organizations directed by their members. Members have the power to direct credit union policy and, if dissatisfied, can even replace the board of directors. Credit unions practice a one-member, one-vote philosophy for all elections, unlike for profit financial institutions whose stockholders vote according to the number of shares of stock they own. Their nonprofit status enables credit unions to operate at a lower cost than many for-profit institutions and helps them to offer competitive loan and savings rates. For instance, credit unions usually charge lower interest on credit cards than most other providers, and many credit unions charge no annual card fee. Credit unions charge lower fees than banks on checking accounts.
