What is a credit union?
From the Illinois Credit Union League
The idea for credit unions was based on the simple principle that ordinary people could pool their money and make loans to each other.
Credit unions are member-owned, not-for-profit financial cooperatives, owned and controlled by the people who use their services. They have no incentive to take risks with members’ money and do not invest in risky or speculative ventures.
To join a credit union, a person must be within its field of membership, which is stipulated in its charter. Credit unions serve groups of people who share something in common, such as where they work, live or worship.
While credit union membership (its common bond) has been traditionally tied to an individual’s workplace, several credit unions in north central Illinois have expanded their charters to make credit union services available to more individual residents in our communities.
Every member is an owner with an equal vote in the election of the credit union’s volunteer board of directors. Credit unions return earnings to their members in the form of lower rates on loans, higher dividends on savings, and fewer and lower service fees. Many credit unions have expanded their services to include credit cards, debit cards, checking accounts, online services, IRAs, mortgages, and student loans.
An important part of the credit union mission is to educate members to be smarter consumers and better managers of their own finances. Credit unions encourage saving, and provide valuable information through youth programs, newsletters, financial counseling, and other means.
As with other financial institutions, credit unions are regulated by state and federal agencies. The funds credit union members deposit are insured by the National Credit Union Administration (NCUA) or American Share Insurance (ASI) up to $250,000. In addition, credit unions, like other financial institutions, are closely regulated for safety and soundness. The main regulators are the Illinois Division of Financial Institutions (DFI) and the NCUA.
From the Oct. 19-25, 2011, issue
Print This Article