Credit Union Fact Sheet

What is a credit union?

• A credit union is a not-for-profit financial institution that is owned and controlled entirely by its members. Credit unions provide financial services to its members, and members directly benefit from profits incurred by the credit union.

Who runs a credit union?

• A volunteer board of directors, elected by the credit union members, runs the credit union.

What is the difference between credit unions and banks?

• Credit unions are member-owned and not-for-profit organizations, and members directly benefit from profits incurred by the credit union (after covering overhead costs). Banks are for-profit organizations which serve the primary purpose of making money for the investors and stock holders. Customers of banks hold no decision making power within the institution.
• Credit unions offer most of the same services as banks; and often at better rates, low or no fees and with superior member service. Also, some of the services offered by banks are named differently at credit unions. For instance, a share draft account compares to a checking account, share certificates compare to certificates of deposit, and regular share accounts compare to savings accounts.
• Many smaller credit unions offer only basic services. Loans to members are a credit union's biggest investment (mostly home and auto loans). However, larger credit unions, such as United Federal Credit Union, provide full financial services including federally insured, interest-earning deposits, consumer loans, mortgage products, credit card services, investments and business/commercial accounts.
  

What are the direct member benefits of credit unions?

• Credit unions can often offer higher interest rates on savings and lower rates on loans than banks. This is because profits earned beyond operating costs are returned to credit union members in the form of better interest rates, low or no fees, and improved and expanded services and facilities.
• Credit unions pride themselves on safe lending to their members. They don't recommend loans to members that aren't sensible, and don't make investments that aren't financially sound.
• For the primary purpose of making money for the investors and stock holders, for-profit financial institutions, such as banks, are looking for a return on an investment when a member takes out a loan. Credit unions, on the other hand, have no stockholders looking at the return on their investment.

Why don't credit unions take advantage of government bailout funds?

• The majority of the nation's credit unions do not have troubled assets on their balance sheet; therefore, credit unions are typically not in need of a bailout by the U.S. government.
• Credit unions pride themselves on safe lending to their members. They don't recommend loans to members that aren't sensible, and don't make investments that aren't financially sound. It is for that reason that credit unions typically aren't in need of bailout funding.
• Legislatively, the bailout law was written to make TARP funds only available to the banking sector.