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Frequently Asked Questions About Credit Unions:
A. A credit union is a not-for-profit financial cooperative that is owned by its members. Member savings form a pool of money from which low-cost loans are made to other members. Once overhead and other expenses are paid and reserves set aside, income from loans is returned to members in the form of dividends on savings, expansion of services, a larger cushion against loss, etc. After a credit union has met its other goals, it may give any remaining surplus back to the members as bonus dividends on savings or loan interest rebates. Back to TopQ. What is the purpose of a credit union? A. The philosophy of the credit union movement is Not for Profit, Not for Charity, But for Service. Credit unions promote thrift and teach the wise use of credit. Credit unions encourage their members to develop a systematic savings program and they provide a source of low-cost credit. Because credit unions are not-for-profit and have low overhead costs, they are usually able to offer lower interest rates on loans and higher dividends on members' shares (savings). A credit union is also non-profit in the sense that its purpose is to serve the members, not to make money. It needs money to provide services and benefits. But money is the means, not the end itself.Back to TopQ. How are credit unions operated? A. Credit unions are democratically controlled by their members. The members, themselves, elect a board of directors from among the membership, which is responsible for setting policy. Day-to-day operations are handled by paid professionals, or in the case of a small sized credit union, by volunteers. Back to TopA. A credit union receives its authority to operate by obtaining a federal or state charter. Federally chartered credit unions follow the regulations set by the Federal Credit Union Act, and state chartered credit unions follow those under the State Credit Union Act. Annual examinations and oversight is conducted by the supervisory agencies—the National Credit Union Administration (NCUA) for the federal credit unions and the Pennsylvania Department of Banking for credit unions chartered under Pennsylvania laws. Back to TopA. Member savings accounts at all Pennsylvania credit unions are federally insured up to $100,000 by NCUA's share insurance fund. This fund is backed by the full faith and credit of the government. No taxpayer funds are used to support the NCUA or the credit union insurance fund. Back to TopQ. Who may join a credit union? A. Every credit union serves a specific field of membership as defined by its charter. Anyone who falls within the common bond of the credit union may join and share in its ownership. A common bond can be defined as the employees of a company, members of a civic or church group, residents of a community or numerous groups together. Generally, persons within a member's family, by blood or marriage, may also join.Back to Top
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