A credit union is a non-profit, cooperative financial institution owned and operated by its members. Organized to serve and democratically controlled, credit unions provide their members with a safe place to save and borrow at reasonable rates. Credit unions differ from banks and other for-profit financial institutions in that members of a credit union are also owners. The board of directors are elected in a democratic one person-one vote system regardless of the amount of money invested in the credit union. Not for profit, not for charity, but for service is a credit union motto. Since profit is not a motivation, interest rates have been historically favorable for consumers at credit unions compared to banks.
Credit unions are not new. Originating in Europe, credit union history began in the United States when the first credit union was formed in Manchester, New Hampshire, in 1909. Today, over 9,000 credit unions with over $500 billion in assets serve more than 83 million people in the United States. More and more people join credit unions every year and they are pleased with the service. Credit unions have rated No. 1 in customer satisfaction at financial institutions for more than 10 years according to the American Banker Newspaper's annual customer satisfaction survey.
Credit Union Membership: To join a credit union, you must be eligible for membership. Each institution decides who it will serve. Most credit unions are organized to serve people in a particular community, group or groups of employees, or members of an organization or association. If you are a relative of a credit union member, you are also eligible to join.
Low-income designated credit unions are a unique form of credit union. They serve primarily low-income members in distressed and financially underserved areas. In the past few years, NCUA has emphasized the benefits these institutions provide to the many people who are often unserved by traditional banking institutions. NCUA also manages a Revolving Loan Fund and provides technical assistance grants to low-income designated credit unions.
Corporate credit unions are another form of credit union. While they don't serve people, they play a vital role in the system by acting as a credit union for credit unions. The 32 federally insured corporate credit unions across the country provide investment, liquidity, and payment services for their member credit unions.
Credit Unions, in the United States, are usually closed on Federal Holidays
. Check with your credit union to see if they are closed on any additional days.
Credit Union Rates Compared With Bank Interest Rates
Credit unions often offer competitive rates on everything from savings accounts, auto and home loans, and credit cards in part because they are non-profit agencies and have no taxes to pay and not publicly traded corporations. This way they can pay their members above-average rates on deposits and charge below-average rates on loans and credit cards. On average consumers find the best interest rates at credit unions
compared to banks.