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Home > Credit Unions - What Is A Credit Union

What is a Credit Union?

The HCCUA is a not-for-profit association created with the goal of improving and protecting the physical and financial health of its members by providing access to beneficial resources. It is not a credit union, nor is it affiliated with one.

A credit union is a cooperative, financial institution owned and controlled by the same people who use its services. These people are called ‘members’.Credit unions serve groups that share something in common, such as where they work, live, worship or go to school. The group is called a “field of membership” and may be a group of employees, professional group, religious group, or group of individuals living in a certain locale. It is possible for credit unions to expand their field of membership to allow smaller employee groups to also participate in the benefits of the credit union.

Credit unions are not-for-profit and exist to provide a safe, convenient place for members to save money and get loans at reasonable rates. They encourage members to save money through programs that automatically deduct funds from salaries and put them into a member savings account. They also exist to provide financial services at an institution which exists only to benefit its members, not to make a profit. Rather than paying profits to stockholders, credit unions return earnings to members in the form of dividends or improved services.

Who directs and manages a credit union? The credit union is directed through a board elected by the membership. The board serves on a volunteer basis, usually without compensation, and may hire a management team to run the credit union. The board establishes and revises policy, sets dividend and loan rates, and directs all operations through its management structure.

Who owns a credit union? Each credit union member owns one "share" of the organization. Because any user of credit union services is also an owner, he or she is entitled to vote on important issues, such as the election of member representatives to serve on the board of directors. Each member has one vote no matter how much or how little the member deposits or borrows.

What makes a credit union different from a bank or savings & loan? Like credit unions, banks and other financial institutions accept deposits, make loans, and offer many other financial services, as well — but unlike credit unions, they are also in business to make a profit. Banks and savings & loans are owned by groups of stockholders whose interests include earning a healthy return on their investments. Therefore, they make decisions with a very different set of goals than a credit union board has for its members.

How are credit unions regulated? Credit unions, like other financial institutions, are closely regulated. The National Credit Union Share Insurance Fund is administered by the National Credit Union Administration (NCUA), which is an agency of the federal government. This fund insures deposits of credit union members at more than 11,000 federal- and state-chartered credit unions nationwide. Deposits are insured up to $100,000 per account. Some credit unions also have additional insured coverage for their accounts.

How did credit unions start?

The first credit union cooperatives started in Germany over a century ago. Today, credit unions are found everywhere in the world. The credit union movement started in this country in Manchester, New Hampshire. There, the St. Mary's Cooperative Credit Association, a church-affiliated credit union, opened its doors in 1909. Today, one in every three Americans is a credit union member.

Why join a credit union?

Founded on the basic democratic premise of the cooperative movement, credit union members believe that access to low-cost financial services is critical to the financial health and stability of ordinary citizens. Credit unions are formed by groups of people with a common bond who decide they want to be in control of their financial future. This is where the credit union philosophy of “people helping people” came from.

Currently, more than 67 million Americans belong to a credit union and utilize their credit union services to protect and improve their financial well being.

Credit union membership offers many benefits. Depending upon the individual credit union,benefits offered can include simple savings accounts, checking accounts, mortgage and home equity loans, payroll deductions, IRAs, internet account access, direct and night deposits, ATMs, Share Certificates, bank to bank wiring, Notaries, safe deposit boxes, consumer loans (vehicle, education, hospital), online banking, special savings clubs (Christmas, college, vacation, kids, teens), convenient information on rates for different savings and loans programs, free credit reports, Kelley blue book for vehicle values, and money orders and travelers’ checks.

Study after study has revealed that on average, credit unions provide the best financial offerings with fewer fees, lower rates on loans and higher rates on savings. One study estimated an average savings per year of $400 for each member on their banking services. For the last 16 years credit unions have also continually scored higher than all other financial institutions in consumer satisfaction surveys.

Credit unions strive to deliver the best service possible to their most important asset - their members.

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