A credit union is a cooperative financial institution, owned and controlled by the people who use its services. These people are members. Credit unions serve groups that share something in common, such as where they work, live, or go to church. Credit unions are not-for-profit and exist to provide a safe, convenient place for members to save money and to get loans at reasonable rates.
Government Regulation of Credit Unions
Credit unions, like other financial institutions, are closely regulated and operate in a very prudent manner. The National Credit Union Share Insurance Fund (NCUSIF), administered by the National Credit Union Administration — an agency of the federal government — insures deposits of credit union members at more than 9,000 federal and state-chartered credit unions nationwide. Deposits are insured up to $250,000.
What Makes a Credit Union Different from a Bank?
Like credit unions, banks and savings & loan institutions accept deposits and make loans — but unlike credit unions, they are 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. Credit union members are the owners, and profits are returned to members in the form of better rates and lower fees.