Credit unions continue to be safe,
consumer-friendly financial service providers that
offer consumers with alternatives to for-profit
financial institutions. And for many low-income
people who cannot afford the fees and high minimum
balances required at some banks, credit unions are
their only source for affordable loans and a good
return on savings.
Credit unions as financial cooperatives invest
their money primarily in small consumer loans to
their members. They are prohibited by law from
investing in leveraged buyouts, loans to Third
World countries or speculative land deals.
How the Credit Union
Difference Improves Safety and Soundness:
cooperatives, credit unions are democratically
controlled by the members.
member is a shareholder with a vote in the
operation of the credit union.
Operating costs are lower in part because board
members are trained volunteers.
Not-for-profit credit unions tend to be
conservatively run because members manage their
Personal loans predominate. Car loans and small
personal loans account for more than half of
credit union lending. As a result, the average
loan delinquency for credit unions in the United
States is around one percent of total loans.
How Your Accounts Are
The National Credit
Union Administration, commonly referred to as NCUA,
is the federal government agency that charters and
supervises federal credit unions. NCUA also operates
and manages the National Credit Union Share
Insurance Fund (NCUSIF). Backed by the full faith
and credit of the U.S. government, NCUSIF insures
the accounts of millions of account holders in all
federal credit unions and the majority of
state-chartered credit unions.
The NCUSIF provides all
members of federally insured credit unions with
$250,000 in coverage for their individual accounts.
These accounts include regular shares, share drafts
(similar to checking), and share certificates.
Individuals with account balances totaling $250,000
or less at the same
credit union have full NCUSIF coverage.
If a person has more than
$250,000 at any
credit union, several options are available for
additional coverage because the NCUSIF provides
separate insurance for other types of accounts such
as joint accounts.
For more information on
NCUSIF you may contact the credit union or the NCUA
Insurance Hotline at 1-800-755-1030. You may also
view information additional information at NCUA's
Insurance Coverage Toolkit.