Credit Union Advice & Articles

One of the core distinctions between a credit union and a commercial bank lies in its structure of control. Credit unions adhere to the principle of "one member, one vote," meaning every account holder, regardless of their balance, has an equal say in the institution's direction.

This democratic framework directly influences governance. The board of directors is composed of volunteer members elected by the membership. These directors live within the community and represent the interests of their fellow account holders, not external shareholders seeking maximum profit.

The result of this localized governance is a strong focus on community impact. Credit unions frequently invest in local programs, offer financial literacy workshops, and prioritize lending practices that support local economic stability. This commitment creates a financial institution that acts as a true community partner rather than just a banking service.

When considering where to place your savings, safety is always the top priority. For credit unions, deposit safety is guaranteed by the National Credit Union Administration (NCUA). The NCUA operates the National Credit Union Share Insurance Fund (NCUSIF).

This insurance fund provides coverage that is equivalent to the Federal Deposit Insurance Corporation (FDIC) coverage used by banks. Essentially, all federally chartered and most state-chartered credit unions insure member deposits up to $250,000 per share owner, per insured credit union, for each account ownership category.

This means your funds are protected by the full faith and credit of the United States government. This guarantee allows members to save and transact with confidence, knowing their money is secured, regardless of the credit union's financial performance. Always look for the NCUA insured sign when choosing your financial institution.

Unlike banks, which serve the general public, credit unions are governed by a "common bond" requirement. This bond defines who is eligible for membership, often based on where you live, who you work for, or specific community affiliations. This focus ensures the credit union remains dedicated to the specific financial needs of its defined member group.

The application process is typically straightforward and can often be completed entirely online. You will generally need:

• Valid photo identification (e.g., driver's license).
• Social Security number or other tax identification number.
• Proof of eligibility for the credit union’s common bond.
• A small initial deposit (often $5 to $25) to open a share savings account, which establishes your membership and ownership stake in the cooperative.

Once you meet the common bond and open an account, you gain full membership and access to all services.