What Is a Credit Union?

A credit union is not a bank or a savings and loan association. A credit union is a cooperative financial institution, owned and controlled by its members. Credit unions typically serve groups who have something in common, such as where they live, work, or attend church. Credit unions are not-for-profit and exist to provide members with a place to save money and get loans at reasonable rates. Because a credit union is not-for-profit, any net earnings it might have are used to benefit its members.

Because a credit union is not-for-profit, any net earnings it might have are used to benefit its members.

Credit unions, like all other financial institutions, are closely regulated. The National Credit Union Share Insurance Fund (NCUSIF), administered by the National Credit Union Administration (NCUA), an agency of the United States Government, insures deposits of federally chartered credit unions and most state-chartered credit unions nationwide. State-chartered credit unions that are not covered by NCUSIF may be insured by private insurers. Deposits are generally insured up to $250,000 ($250,000 for retirement accounts).

The $250,000 amount for non-retirement accounts will revert to $100,000 on January 1, 2014.

Like banks and savings and loans, credit unions accept deposits and make loans—but because they are not-for-profit, credit unions provide their member-owners with benefits such as lower loan rates and higher deposit rates. Credit union members elect a volunteer board to oversee the credit union, and the president reports to this board.

A not-for-profit financial cooperative owned by its members. One is eligible to join a particular credit union if he or she belongs to the field of membership defined in its charter. All members have the right to democratically elect a board of directors. The board gives the credit union's management and staff general instructions. Historically, credit unions encourage thrift among members and provide them with credit at a low rate.

A business, with a state or federal government charter, that provides services such as paying interest on deposits, issuing and collecting checks, and making loans, especially to businesses. Shareholders receive part of a bank's profit as a return on their investment in the bank, represented by the stock that they've purchased.

A financial institution, with a state or federal government charter, that takes deposits from individuals and uses them to make loans, especially mortgage loans. Depositors or shareholders receive part of a savings & loan's profits as a return on their investment in the savings & loan, represented by the money they've deposited or the stock that they've purchased.

An arrangement in which each participant is part owner of an asset or group of assets. For example, people have formed a cooperative (sometimes known as a co-op) to democratically share ownership of a business or apartment building. A credit union is a financial cooperative.

A special kind of corporation dedicated to education or charity, whose stockholders give up all financial benefits.

The medium of exchange used in trade or commerce.

Money that has been borrowed from a creditor (lender) by a debtor and that must be repaid. Loans may also be referred to as liabilities.

Gross sales minus interest, taxes, cost of goods sold, and other expenses.

An amount of money that credit unions set aside by law to insure their members' money against loss. Similar to Federal Deposit Insurance Corporation insurance on bank and savings and loan accounts.

1. Money placed into a savings account at a financial institution. 2. Money given to a seller as proof of intention to buy a piece of property; also called a down payment. 3. To deposit funds into an account.

Termination of employment due to age, choice, or physical limitation. Certain benefits, such as Social Security payments, are available to those who retire. In finance, retirement is the paying of a debt when or before it is due.

Someone who meets the eligibility requirements for joining a credit union and who maintains a required minimum savings balance. A credit union's members own the credit union.

What Is a Credit Union?

Introduction to Credit Unions