What is a Credit Union?
Credit unions are not-for-profit cooperatives, owned by their members who save and borrow there. The philosophy of the credit union movement is “not for profit, not for charity, but for service.” This philosophy dictates how a credit union differs from other financial institutions. When you open your account, you become an owner of your credit union.
The Board of Directors, which is responsible for setting the policies of the credit union, is elected from the membership. As a member of a credit union, you can nominate someone for the board or run for office yourself. You may also choose to volunteer to serve on various credit union committees such as the Credit Committee or Supervisory Committee. In selecting the directors, each member receives one vote, regardless of the amount of money the member has with the credit union.
Credit unions are focused on people, not profits. They operate by a “people helping people” philosophy that is hard to find at many other financial institutions.
What is the difference between banks and credit unions?
What makes a credit union different from a bank or a savings and loan? Like banks, credit unions accept deposits and make loans — but that’s where the similarities end. Unlike banks, credit unions are not in business to make a profit.
Banks and savings and loans associations are owned by groups of stockholders whose interests include earning a healthy return on their investments. Credit unions are not-for-profit financial cooperatives, owned and controlled by the people who use its services, called members. Any excess earnings are returned to members in the form of higher savings rates, lower loan rates, fewer fees, and expanded services.
Credit unions are unique in the world of financial institutions. While their purpose is to provide a safe, convenient place for members to save money and to get loans at reasonable rates, credit unions come in many shapes and sizes. Most offer low and no-cost savings and checking accounts and vehicle loans, as well as a full line of financial products including mortgages, credit cards, business loans, and electronic services including online banking. Some credit unions, including RBFCU, offer financial education training to help members become better-educated consumers of financial services.
Credit unions, like other financial institutions, are closely regulated. RBFCU is federally insured by the National Credit Union Administration (NCUA).
What makes a credit union different?
Every credit union is governed by a board of directors, elected by and from the credit union’s membership. Board members serve voluntarily and receive no compensation.
Credit unions are a democracy. Each credit union member has equal ownership and one vote, regardless of how much money they have on deposit.
Not for profit
Credit unions are not-for-profit financial cooperatives. We exist to serve our members, not to make a profit, so credit unions do not issue stock or pay dividends to outside stockholders. Instead, we return our earnings to members by providing lower loan rates, generally pay higher dividends on deposits and charge lower fees.
Credit unions cannot serve the general public; instead people must qualify for membership. People are eligible for credit union membership through their employer, organizational affiliations like churches or social groups, or a community-chartered credit union.
Credit unions provide beneficial education to their members so they can become better-educated consumers of financial services. We not only focus on our adult members, but work to give our youth and young adults the skills they need to become financially savvy.
‘People helping people’ philosophy
Credit unions are focused on the common goal of providing quality financial services based on a foundation of financial strength and integrity. The philosophy of “people helping people” extends to our employees who become involved in many charitable activities that benefit the community.
How are credit unions different from banks?
Credit unions ...
Credit unions ...
... are member-owned. If you have an account at a credit union, you have a share in it. Every member is equal, regardless of financial investment, and carries one vote in the democratic processes that guide the credit union.
... are owned by shareholders. The more shares you can purchase, the more of the bank you can own, and the more influence you have.
Credit unions ...
... are not-for-profit cooperatives. Earnings are returned to their members — anyone with a share account — in the form of lower interest rates on loans and higher interest rates on deposit accounts.
... are for-profit. Banks' earnings are distributed to its executives and those who own shares or stock in the company. Customers rarely see the effects of profit.
Credit unions ...
... are governed by Boards of Directors. Board members set the policies and govern the affairs of the credit union. More importantly, they are elected from the membership, and they are volunteers who receive no compensation for their work.
... are run by board members or executives who are hired, often from outside the organization and even from outside the banking clientele.