The Credit Union System
The only financial service network dedicated to member service instead of profit.
Credit Unions began as an idealistic, yet practical, experiment. The concept was simple: Members pool their savings and lend to each other. Credit union founders had a motto, still used today, describing why credit unions were started in the first place: “Not for profit, not for charity, but for service.” From the beginning, credit unions sought to keep people economically independent – by helping them learn to save and borrow prudently.
Our field of membership is determined by where you live, work, go to school or where you worship. Only eligible individuals may belong to the credit union and vote at meetings.
Another feature of credit unions is their volunteer leadership. The credit union board members (directors) are qualified, unpaid volunteers the members elect. They work for the membership’s best interest, not for the interest of a few stockholders.
Credit Unions are unique, they are different and separate from profit making financial institutions (banks and savings & loans). Credit unions are owned and democratically controlled by their members. The members elect the directors who set policy. The surplus from operations belongs to the membership and is used to benefit them, not a group of stockholders. “Not for profit, not for charity, but for SERVICE.”
As times change, so do credit unions. When new member needs arise, credit unions find ways to satisfy those needs. Credit unions remember their mission and are always looking for ways to benefit our members.
The Credit Union Difference!
Credit Unions are financial cooperatives. They are organized for the purpose of providing financial services to a certain group of people – the members.
Purpose…Credit Unions exist not for charity, not for profit, but for service.
Others – to make a profit.
Definition…Credit Unions are financial cooperatives owned and controlled by their members.
Others – financial institutions that are owned by groups of shareholders who may or may not have accounts there.
Governance…Credit Unions are democratically structured, every member has an equal say about a credit union’s goals, functions, and services.
Others – Depositors are not guaranteed a vote. In a bank or savings and loan, only shareholders may vote on goals, functions, and services. In mutual banks, votes are weighted according to amount of deposits.
Directors…Credit Union members elect the directors who volunteer their time.
Others – Board members are elected by their shareholders and are paid.
Earnings…Credit Union earnings are returned to members in the form of higher savings rates, lower loan rates, no or lower fees, and improved services.
Others – Earnings are returned to shareholders.
Capital…Credit Unions can build capital only through their earnings.
Others – Capital is obtained through investments by shareholders.
FAQs
Credit Unions are unique, they are different and separate from profit making financial institutions (banks and savings & loans). Credit unions are owned and democratically controlled by their members. The members elect the directors who set policy.
What does being a credit union mean? ›
A credit union is a not-for-profit financial institution that accepts deposits, make loans, and provides a wide array of other financial services and products.
Is a credit union better than a bank? ›
Better interest rates: Credit unions typically offer higher interest rates on savings accounts because they have lower overhead costs than banks. Similarly, they offer lower interest rates on loans. Customer service: Credit unions pride themselves on offering better customer service than banks.
What are the best credit unions to join? ›
Choosing the best credit union: Where to begin
| Brand name | Best for | APY* |
|---|
| Alliant | Overall | Up to 3.10% |
| PenFed | Rewards credit card | Up to 3% |
| First Tech Federal Credit Union | Low-interest credit card | Up to 5% |
| Consumers Credit Union | Deposit account variety | Up to 3% |
4 more rowsCredit Unions are the only democratically run financial institution. A federal credit union is member-owned and controlled. Member's interests are represented by a volunteer board of directors drawn from the membership and elected by the membership.
Why would someone join a credit union? ›
Pros of credit unions
Credit union profits go back to members, who are shareholders. This enables credit unions to charge lower interest rates on loans, including mortgages, and pay higher yields on savings products, such as share certificates (the credit union equivalent of certificates of deposit).
Is it good or bad to have a credit union? ›
What Are the Major Advantages of Credit Unions? Credit unions typically offer lower closing costs for home mortgage loans, and lower rates for lending, particularly with credit card and auto loan interest rates. They also have generally lower fees and higher savings rates for CDs and money market accounts.
Why do banks not like credit unions? ›
For decades, bankers have objected to the tax breaks and sponsor subsidies enjoyed by credit unions and not available to banks. Because such challenges haven't slowed down the growth of credit unions, banks continue to look for other reasons to allege unfair competition.
What is the downside of banking with a credit union? ›
With a credit union, you might have to do some extensive research to compare accounts and find out what services they offer. Credit unions only serve certain groups of people and if the ones you can join don't have mobile banking or their apps aren't up to par, that could potentially be a major disadvantage.
Is your money safer in a credit union than a bank? ›
Generally, credit unions are viewed as safer than banks, although deposits at both types of financial institutions are usually insured at the same dollar amounts. The FDIC insures deposits at most banks, and the NCUA insures deposits at most credit unions.
Navy Federal Credit Union
FICO® Scores are the most widely used credit scores. Each FICO® Score is a three-digit number calculated from the data on your credit reports at the three major consumer reporting agencies—Experian, TransUnion and Equifax.
What are 3 pros and 3 cons for credit unions? ›
The Pros And Cons Of Credit Unions
- Better interest rates on loans. Credit unions typically offer higher saving rates and lower loan rates compared to traditional banks. ...
- High-level customer service. ...
- Lower fees. ...
- A variety of services. ...
- Cross-collateralization. ...
- Fewer branches, ATMs and services. ...
- The biggest negative.
bank in a recession, the credit union is likely to fare a little better. Both can be hit hard by tough economic conditions, but credit unions were statistically less likely to fail during the Great Recession. But no matter which you go with, you shouldn't worry about losing money.
How do credit unions make money? ›
Any income the credit union generates through interest, fees and loans is then used to fund community projects, reinvest into the organization or provide services that directly benefit members, like paying higher savings interest rates.
Is it better to have money in a credit union? ›
Like we hinted at in the last reason, Credit Unions are known to have better and lower loan rates compared to big banks because our profits go right back to our members in the form of great deals. Expect lower interest rates and bigger returns with a Credit Union.
What are the pros and cons of a credit union? ›
The pros of credit unions include better interest rates than banks, while the cons include fewer branches and ATMs.
Is a credit union safer than a bank? ›
Just like banks, credit unions are federally insured; however, credit unions are not insured by the Federal Deposit Insurance Corporation (FDIC). Instead, the National Credit Union Administration (NCUA) is the federal insurer of credit unions, making them just as safe as traditional banks.
How does a credit union make money? ›
Any income the credit union generates through interest, fees and loans is then used to fund community projects, reinvest into the organization or provide services that directly benefit members, like paying higher savings interest rates.
What are three differences between a bank and a credit union? ›
But compared to banks, credit unions tend to be smaller, operate regionally and are not-for-profit. In many instances, they offer lower rates on loans, charge fewer fees and offer better interest rates for deposit accounts than traditional banks.
