Facts about Federal Credit Unions
Last updated 10/13/2014 at Noon
What is a federal credit union?
A federal credit union is a financial cooperative chartered by the federal government and owned by its members. Federal credit unions offer members a safe place to save and borrow at reasonable rates. Surplus income is returned to members in the form of dividends.
Originating in Europe, credit unions began organizing in America in the early 1900's to promote thrift among heir members. Credit unions then and now serve many left unserved by traditional banking institutions and provide an alternative to oppressive loan charges.
Today's credit unions remain unique financial institutions with a philosophy to operate not for profit, but for service. Annual polls show that credit unions kid the financial community year after year in providing top=quality personal service to millions of Americans.
Federal credit unions are chartered, supervised, and insured by the National Credit Union Administration (NCUA), an agency of the federal government.
What a credit union does
Credit unions encourage their members to save regularly to build economic security for themselves and their families. Credit union members provide one another with consumer, and in many case, home mortgage loans from their pooled savings. This benefit and many others help members achieve financial stability.
Credit unions are not new. The credit union movement began in the United States in 1909 when the first credit union was formed in Massachusetts, New Hampshire.
Who can join an FCU?
Federal credit unions , deposits and the number of members they served have grown every year since the first federal credit union was chartered in 1934.
Credit unions grow consistently
Federal credit unions deposits and the number of members they serve have grown every year since the first federal credit union was chartered in 1934.
Congress formed our federal credit unions system
The U.S. Congress drafted, and President Roosevelt signed the Federal Credit Union Act in 1934. This Act established the federal credit unions system and created NCUA's predecessor to charter and supervise federal credit unions. The general provisions in the Federal Act are similar to those of many state credit union laws.
The Federal Union Ac t is amended periodically to evolve and remain a modern credit union law.
This contemporary law, coupled with the NCUA Board's commitment to reduce regulatory burden, enables deferral credit unions to offer a variety of services to meet the financial needs of their members.
For example, in addition to basic passbook share savings accounts, manna federal credit unions offer share drafts, share certificates, credit cards, and individual retirement accounts.
In recent years, many have expanded their lending programs to include era; estate, member business, and guaranteed student loans as well sass the traditional consumer loans.
As technology evolves, more and more federal credit unions respond by offering transaction services by telephone and by personal computer via the internet.
Deposits are safe
Members deposits in federal credit unions are insured up to $100,000 per account by the National Credit Union Share Insurance Fund (NCUSIF) and backed by the full faith of the U.S. Government. Savings are also protected by e number of provisions in the Federal Credit Union Act, and the Standard bylaws. Some protections are:
1) All persons handling or having custody of credit union funds must be bonded.
2) The affairs of the credit union and the records of the treasurer are audited by the supervisory committee.
3) The Federal Credit Union Act and Bylaws provide for setting aside reserves for uncollectible loans.
4) Credit unions may invest surplus funds only in specified investments.
5) All federal credit unions are supervised and examined annually by the NCUA.
How a federal credit union operates
The basic purpose of a credit union is to encourage systematic savings. Whether large or small, the amount is secondary to developing the habit of saving regularly.