What is a Credit Union?

What is a credit union?
A credit union is a not-for-profit, cooperative financial institution owned and run by its members.

Thatís nice, but what does that mean to me?
Well, a credit union is a full service financial institution, offering a wide variety of products to its members ó often with lower rates on loans, higher yields on savings and certificates, and many low or no-fee services.

How are you able to offer better rates and lower fees?
The process is simple. Members pool their funds together by making deposits into various accounts. This pool of funds is used to make loans to other members for new cars, homes, or even vacations. The income generated from these loans is used to cover the credit unionís operating expenses and reserve requirements, with the remaining funds returned to the depositing members as dividends and services.

Okay, you mention member a lot. What do you mean by being a "member" of a credit union?
Credit unions are established to serve a group of people who comprise our membership base. These "members" are united by a common bond, such as living in a specific community or working for the same employer.

How is being a member different from being a customer at a bank?
As a member and owner, you have a say in how the credit union operates. You are able to vote in a democratic election of the credit unionís officials, or even run for a vacant position. Every member has an equal vote in the elections, regardless of the number of deposits or services held with the credit union.

And what do the officials do?
The credit union officials are comprised of our board of directors and committee members. All officials volunteer their time, knowledge, and experience to direct the credit union to benefit the membership as a whole. Regular meetings are held to ensure that the credit union is operating safely and properly.

What about stockholders and their input?
A credit union does not have stockholders. As a not-for-profit, democratic organization, a credit unionís structure directly opposes that of a for-profit company or institution where stockholders vote based on the amount of stock they own. In addition, the directors of these for-profit institutions are normally paid for their services.

Well, everything sounds nice, but are credit unions safe?
Credit unions are closely regulated on federal and state levels to ensure the safety and soundness of their practices. Many credit unions, like Western Healthcare Federal Credit Union, are insured by the National Credit Union Share Insurance Fund (NCUSIF), which is administered by the National Credit Union Administration (NCUA), an agency of the federal government. This fund has been the strongest of the federal insurance funds, which include the Federal Deposit Insurance Corporation (FDIC) and the Federal Savings and Loan Insurance Corporation (FSLIC), for the past decade.