While millions of Americans are members of credit unions, many people still do not understand what the credit unions.
Credit unions are not-for-profit financial cooperatives serving members of groups that have something in common, such as employment in the company, membership in an association, or residence in a particular geographic area. Credit unions that can serve anyone who lives or works in a particular geographic area is called the credit union community. Credit unions serve groups of employees or the associations are commonly referred to as SEG-based (to select employee groups) or sponsor, to the credit union.
More than 82 million U.S. consumers are member-owners, and to receive all or part of their financial services from the people 10,425 credit unions. As a not-for-profit cooperatives, credit unions generally offer more attractive savings and loan rates and low or no fees. Surveys consistently rank credit unions first among financial institutions in consumer satisfaction.
Credit unions are democratically owned and controlled institutions based on people helping people principle. Credit Union Board of Directors elected by the members. Each member has equal voice, regardless of how he or she has on deposit. The mutual bank, the amount of the deposit determines the number of votes. The publicly-held bank, the number of shares to determine.
Only members can serve as a director. They are unpaid volunteers and represent the interests of their fellow members who use the credit union. Committee to other types of financial institutions are paid and represents the interests of outside owners. Volunteers are an important resource of the credit union. Currently, more than 129,000 Americans volunteer for their credit union that serves as a member of the management board, or providing other assistance. Credit unions have no outside stockholders, so after reserves are set aside, earnings are returned to members as dividends on savings, lower loan rates, or additional services.
Credit unions primarily engage in consumer loans and, to a lesser extent, commercial and residential real estate loans to their members.
Deposits at federally-licensed and almost all state licensed credit unions are federally insured by National Credit Union Share Insurance. This fund managed by the National Credit Union Administration (NCUA). It is backed by the full faith and credit of the U.S. government. Like other insurance, such as the FDIC coverage for banks, NCUSIF protects member deposits to $ 250,000.
Authorized Federal credit unions are regulated by the NCUA, an independent federal agency. State licensed credit unions are regulated by their state credit union department. No taxpayer money is used for the NCUA regulation as all activities of NCUA and the NCUSIF pay by credit unions. Credit unions are also subject to many other laws and regulations are managed, such as agencies of the Federal Reserve, Internal Revenue Service, Federal Trade Commission, Ministry of Justice, Department of Labor, and many other federal and state agencies.
Because a member-owned, democratically operated, not-for-profit nature of credit unions, the federal government's credit unions are exempt from federal income taxes. Most states have extended it to state revenues and most of the sales tax. Credit unions do not pay payroll taxes, property taxes and some taxes. Credit Union members pay tax on credit unions.
