What is a Credit Union?
A credit union is a cooperative, not-for-profit, financial institution, owned and operated by its members to meet their financial needs. A Credit Union serves members who share a common bond such as employment, education, social interest, location, or religion. A credit union does three things:
- Encourages and helps members save regularly through payroll deduction and direct deposit
- Lets members borrow funds at fair rates
- Helps members use their money wisely by providing financial services and education at low or no cost.
How Does a Credit Union Operate?
A credit union is operated by its members. Everyone in a specific field of membership is eligible to join a credit union. The members elect a volunteer Board of Directors from their membership to oversee operations and work with the management staff to meet the goals of the organization. A Supervisory Committee is also made up of members to audit financial operations and ensure safety of members' funds.
Who Regulates Credit Unions?
The National Credit Union Administration (NCUA) regulates all federal credit unions. Under the authority of the Federal Credit Union Act, the NCUA prescribes rules and regulations for the organization and operation of all federally charted credit unions. The NCUA also provides insurance for all federal credit union accounts. Deposits are insured up to at least $100,000 for each member with an additional $100,000, for Individual Retirement Accounts.