What is a Credit Union?
A credit union is a cooperative, not-for-profit financial institution organized to promote savings and provide credit to members. Credit unions offer many of the same financial services as banks, often using a different terminology; including share (savings) accounts, share draft (checking) accounts, credit cards, and share term certificates (certificates of deposit) and online banking.
Credit unions are member-owned and controlled through a board of directors elected by the membership. The board serves on a volunteer basis and may hire a management team to run the credit union. The board also establishes and revises policy, sets dividend and loan rates, and directs certain operations.
Who owns a credit union?
Credit unions differ from banks and other financial institutions in that the members who have accounts in the credit union are the owners of the credit union. Most financial institutions are owned by stockholders, who own a part of the institution and intend on making money from their investment. A credit union doesn't operate in that manner. Rather, each credit union member owns one "share" of the organization. The user of credit union services is also an owner, and is even entitled to vote on important issues, such as the election of member representatives to serve on the board of directors.
How did credit unions start?
Credit union history dates to 1852, when Franz Hermann Schulze-Delitzsch consolidated the learning from two pilot projects, one in Eilenburg and the other in Delitzsch in Germany into what are generally recognized as the first credit unions in the world. He went on to develop a highly successful urban credit union system.
Today, credit unions are found everywhere in the world. Based on data from the World Council of Credit Unions, at the end of 2006 there were 46,377 credit unions in 97 countries around the world. In the United States, St. Mary's Bank Credit Union of Manchester, New Hampshire holds the distinction as the first credit union. St. Mary's opened its doors in 1908. Today, one in every three Americans is a credit union member.
What is the purpose of a credit union?
The primary purpose of credit union service is to encourage members to save money. Another purpose is to offer loans to members. Credit unions can charge lower rates for loans (as well as pay higher dividends on savings) because they are nonprofit cooperatives. Rather than paying profits to stockholders, credit unions return earnings to members in the form of dividends or improved services.
Are savings deposits insured?
Yes. All savings accounts are insured up to $250,000 by the NCUA (National Credit Union Administration), an agency of the federal government. IRAs are insured separately up to $250,000 by the NCUA.
Who can join a credit union?
Governmental regulatory agencies require that credit unions restrict their membership to defined segments of the population, such as people who live, work, worship, or attend school in a well-defined geographic area; employees of specific companies or trades; members of specific non-profit groups (alumni associations, advocacy organizations, churches, or the like); or a particular occupational group (teachers, doctors, etc.). In the U.S., this is referred to as a credit union's "field of membership."
Lakes Area Credit Union’s field of membership is open to anyone who lives, works, worships, attends school, or does business in Itasca County. Current membership at Lakes Area Credit Union continues even if the individual no longer qualifies to be a member (such as having changed professions or moved outside the area). Here at LACU, we stand by the slogan, “once a member, always a member.”