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What Is A Credit Union?
Credit unions are financial institutions. They are not-for-profit, and exist to provide a safe and consumer-friendly place to obtain financial services. Although credit unions offer many of the same services as other financial institutions, their structure is different. Credit union differences include:
Who can use credit union services
Credit union members (those who use its services) share a common bond, such as where they work or live. Credit unions can only serve those members within that limited field of membership. (Learn more about this here.)
Member-Owners
Credit unions have members, not customers. By opening an account, you "join" a credit union and become a "member," a person that uses the credit union's financial services. As a financial cooperative, each person who deposits money in a credit union becomes a member of the credit union because his deposit is considered his share of the ownership. That means credit unions are member-owned. Each member is also an owner of the credit union.
Governance
Credit unions are run by a board of directors who are elected by and from the membership. Each member has one vote, regardless of the amount on deposit at the credit union. Most credit union boards of directors serve as uncompensated volunteers.
Who gets the “Profits”
Credit unions are not-for-profit. After expenses are paid and reserves (which are required by law to help keep the credit union safe and sound) are set aside, surplus earnings are returned to members in the forms of higher dividends, lower loan rates and free or lower-cost services. This unique structure helps allow credit unions to make decisions that are in the best interest of their members.
Taxation
Credit unions pay many taxes, including payroll and property taxes. Credit unions are exempt from federal corporate income tax because they are not-for-profit financial cooperatives. Extra earnings are returned to members in the form of dividends to account holders, more products & services, better rates or lower fees.
Philosophy
The credit union slogan is “Where People Are Worth More Than Money” and our philosophy is “People Helping People.” Both demonstrate credit unions are committed to being the consumer-friendly choice in today’s financial services marketplace!