Not For Profit
Credit unions are not-for-profit financial cooperatives that exist to serve their members. Unlike banks, they do not issue stock or pay dividends to stockholders. Credit union profits are returned to their members in the form of lower fees and better loan and deposit rates. Credit unions are not a threat to the market share of banks. In fact, banks control over 92% of financial institution assets and reported $263 billion in profit in 2022.
Ownership
Credit unions are owned by their members. Coming from diverse socioeconomic backgrounds, every credit union member has equal ownership. A credit union is governed by a volunteer board of directors, elected by and from its membership.
Eligibility
People can qualify for credit union membership through their employer, as well as through organizational affiliations like religious institutions and social groups. In addition, people can join a community-based credit union.
Insured
Like banks, credit union deposits of up to $250,000 per depositor are federally insured by the National Credit Union Share Insurance Fund (NCUSIF), a fund that is backed by the full faith and credit of the U.S. government. Higher insurance levels are available to certain types of accounts like joint accounts and trusts. A relatively small number of credit unions opt for private deposit insurance, which is regulated by state financial regulators. A credit union with private insurance is required to disclose this to its members.
Stable
Stable. Credit union managers don’t face stockholder pressure for maximum short-term profits. They also don’t have compensation packages that encourage risky market behavior. Thus, credit union managers avoid high-risk, higher-return business practices. They also provide responsible loans and stable financial products to members.
Responsible
As in past crises, credit unions worked around the clock during the pandemic to provide their members with the necessary resources to stay in their homes with the lights on and food on the table. Nearly all their members had access to loan modifications and waived fees. They provided more than 200,000 Paycheck Protection Program loans to local small businesses, with an average loan size of $47,600. During government shutdowns, many credit unions provide low or no-interest bridge loans to government employees.
Empowerment
Credit unions exist to help people meet their financial goals, making their members fiercely loyal. Sixty-one percent of credit union members have incomes between $25,000 and $100,000 and nearly 60% of credit union branches are in low and moderate-income neighborhoods. They know that their credit union will be there for them in good times and bad. They assist their members in becoming better-educated consumers of financial services. Credit union members benefit from lower fees, lower loan rates, and higher deposit yields. The credit union difference is about improving the financial well-being of our members and advancing the communities we serve.
