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A credit union is a not-for-profit co-operative financial institution that is owned and controlled by its members, through the election of a volunteer Board of Directors elected from the membership itself. Only a member of a credit union may deposit money with the credit union, or borrow money from it.
A credit union differs from a traditional financial institution (banks, savings and loan, etc.) in that the members who have accounts in the credit union are the credit union's owners. Since a credit union is a co-operative institution, its policies governing interest rates and other matters are set to benefit the interests of the membership as a whole; for example, credit unions often pay higher dividend (interest) rates on shares (deposits) and charge lower interest on loans. Credit union revenues (from loans and investments) do, however, need to exceed operating expenses and dividends (interest paid on deposits) in order to remain in business, and this excess is used to expense loan losses and build capital.
Credit unions offer many of the same financial services as banks, including share accounts (savings accounts), share draft (checking) accounts, credit cards, and share term certificates (certificates of deposit).
The for-profit banking industry has a conflicted relationship with credit unions. Bank trade associations are opposed to the tax-free structure on earnings that credit unions enjoy and the American Bankers Association has identified the revocation of credit unions' tax-free benefits as topping its political agenda in 2004 and 2005. However, bank holding companies and their affiliates aggressively compete to provide services to credit unions through their ATM networks, corporate checking accounts, and Certificate of Deposit programs.
Membership restrictions
Governmental regulatory agencies require that credit unions restrict their membership to defined segments of the population, such as people who live, work, worship, or attend school in a well-defined geographic area; employees of specific companies or trades; members of specific non-profit groups (alumni associations, conservation or other advocacy organizations, lodges, churches, or the like); or a particular occupational group (teachers, doctors, etc.) In the U.S., this is referred to as a credit union's "field of membership." In the U.K. it is referred to as the "Common Bond."
Mergers of smaller credit unions with disparate membership bases often result in a credit union with a wide variety of ways to qualify to join; thus, a credit union may have a much broader field of membership than that credit union's name would imply.
Credit unions generally follow the principle of "once a member, always a member," which allows current credit union membership to continue even if the individual would no longer qualify to be a member (such as changing professions or moving outside the area). However, if the member closes his/her account, the member may or may not be eligible to rejoin, depending on the credit union's policies and government regulations.
• Credit Unions
• California credit unions
• Texas credit unions
See
also:
• Insurance
Settlements
• Four Steps to Creating Good Credit
•
Health
Loans
• Cosmetic
Surgery Loans
• Plastic Surgery Financing
• Injury Loans
This article is licensed under the GNU
Free Documentation License.
It uses material from
the Wikipedia
article "Credit union".
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