Frequently Asked Questions
Q.What is a credit union?
A. Credit unions are financial cooperatives that are owned by their members. Member savings form a pool of money from which low-cost loans are made to other members. Once overhead and other expenses are paid and reserves set aside, income from loans is returned to members in the form of dividends on savings, expansion of services and a larger cushion against loss.
Q. What makes credit unions different form other financial institutions ?
A. It's their structure. Credit unions are democratically controlled by their members. The members, themselves, elect a board of directors from among the membership, which is responsible for setting policy. Day to day operations are handled by paid professionals, or in the case of very small sized credit unions, by volunteers.
Credit unions do not make a profit for a select group of stockholders. While a credit union needs income to provide services and benefits such as dividends on savings, its primary purpose is to serve members. Consequently, credit unions tend to have lower overhead costs and expenses, and are usually able to offer lower interest rates on loans and higher dividends on members shares (savings).
Credit unions promote thrift and welcome savers. They advocate the wise use of credit and will make small loans that other financial institutions would consider too small for processing.
Q. Are savings insured ?
A. Member savings accounts at all Pennsylvania credit unions are federally insured up to $250,000 by the National Credit Union Share Insurance Fund (NCUSIF), which is administered by the National Credit Union Administration (NCUA).
The fund is backed by the full faith and credit of the U.S. government. No taxpayer funds are used to support the (NCUA)or the (NCUSIF).
Q. Who governs credit unions ?
A. A credit union receives its authority to operate by obtaining a federal or state charter. State chartered credit unions follow the the regulation set by the State Credit Union Act; federally chartered ones fall under the Federal Credit Union Act.
Annual examinations and oversight is conducted by the supervisory agencies- the (NCUA) for federal credit unions - and the Pennsylvania Department of Banking for credit unions chartered under Pennsylvania laws.
Q. Who may join a credit union ?
A. Not everyone may join a credit union. Each credit union serves a specific field of membership as defined by its charter. Anyone who falls within the common bond of the credit union may join and share in its ownership. A common bond can be defined as employees of a company, members of a civic or church group, residents of a community or numerous groups together.