What Is A CU?
A credit union is a financial cooperative. What does this mean?
- It means depositors (members) own the institution and are not just customers.
- It means members elect a Board of Directors to govern operations.
- It means, in most cases, Directors are volunteers (receive no pay).
- It means there are no stockholders... only members.
- It means capital comes from retained earnings, not from selling stock.
- It means credit unions do not operate for the purpose of profit, but to serve members.
- It means no insiders are getting rich off the operation of the credit union.
- It means profits are used to pay better than average dividends, offer lower than average loan rates, pay operating expenses and build capital (reserves) for the credit union.
- Credit unions have a defined "field of membership" (eligibility requirements to become a member).
Do all members share equal ownership in the credit union?
- No, ownership is based on dollars on deposit. If the credit union were ever to liquidate, retained earnings (capital) would be distributed according to ownership.
- That being said, each member has only one vote at membership meetings regardless of dollars on deposit.