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Explaining Credit Unions - What Does Member-Owned Mean?

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Some of the most common questions about credit unions revolve around membership—namely, what it means and what privileges it offers. Credit unions are fundamentally different than other financial institutions because if you join one, you become a part-owner and can participate in governance.

What does a credit union do? Let’s take a closer look at how credit unions fulfill their mission of offering affordable banking products to the community.

Understanding Credit Union Membership

What does a credit union do? Established by the Federal Credit Union Act of 1934, credit unions are cooperative financial institutions chartered by the federal or state government and owned by the members.

Credit unions are like banks in the following ways:
  • Members can save and borrow money.
  • Credit union accounts are federally insured.
  • They may offer personal and business banking choices.
  • They have branch and ATM locations.
Unlike banks, credit unions are not-for-profit organizations. Any revenue they generate flows to their members, either directly or indirectly. If a credit union does well, it passes on the "profits" to its members. It does this in the form of low to no fees, higher deposit interest rates, lower loan interest rates, and many other benefits.

In other words, credit unions are member-owned, giving members immediate and direct control. You aren't just a depositor like you are with a big bank. Instead, the credit union you join is a locally-owned and community-focused organization.

What does a credit union do to support the community? These institutions cater to local businesses and residents to help them succeed financially. In fact, credit unions play a crucial role in making capital available to small businesses. While major banks typically see small business loans as risky and tend to charge higher rates or deny applications, credit unions are more likely to consider a broader range of factors and approve business loans to support the local economy.

Credit unions support financial success in the community as a whole. As a member, having access to a wide range of affordable banking products and financial literacy resources can support goals like purchasing your first home, investing for retirement, or financing your child’s education. 

You’ll also have a say in how the credit union is run and be able to ensure that the organization's overall direction aligns with your needs and values by voting or volunteering to sit on the credit union’s board.

What Do Credit Unions Do?

The goal of credit unions is to promote the financial well-being of their members. When you open a credit union account, you are assuming partial ownership of the credit union itself. As a member, you can access financial services like loans, checking and savings accounts, credit cards, and more. These products often offer better rates and lower fees than you would receive at for-profit banks.

The National Credit Union Share Insurance Fund insures deposits at credit unions. Deposits are insured for up to $250,000 per ownership category. This amount is the same as the protection offered by the Federal Deposit Insurance Corporation (FDIC), which insures banks.

Because they operate locally, credit unions tend to have fewer locations than banks. However, utilizing the Shared Branch network allows members of one credit union to perform a range of transactions at another institution. This gives members direct access to their money in over 4,700 federally insured credit unions across all 50 states. This provides members with easy access to their money wherever they go. In fact, credit unions typically have a stronger presence at the community level compared to major banks.

What do credit unions do to offer a modern banking experience? Most credit unions have embraced digital transformation and are actively investing in tech solutions such as online banking tools or AI-powered experiences.

Major banks might have had an advantage in the past, but credit unions have successfully established themselves as innovative financial institutions with convenient digital banking options.

Modern online banking and mobile banking apps allow you to securely use your credit union services wherever you are, 24/7. Some of the transactions that members can handle with their devices may include:
  • Digital Wallets – Link a credit union debit or credit card to your digital wallet so payments can be made through a smart device such as a smartphone and used for in-store and online purchases
  • eStatements – View monthly statements online or through the mobile app
  • Bill pay – Set up automatic payments for utilities, internet, and other monthly expenses
  • eDeposit – Skip the trip to the ATM or branch and deposit checks digitally through the mobile app
  • Live chat – Get help from customer service agents on a mobile device
  • Money Transfers­ – Send money quickly and safely at no charge
Credit union members receive the same level of access, products, and digital services that banks offer their customers. At a credit union, however, the human connection and level of service are often more personalized.

Because credit unions are smaller, they can often get to know their members at a deeper level. Their focus is on helping members at an individual level with their financial needs. Some may offer their members training and counseling to help them understand more complicated financial topics.

Plus, agents are often members of the community and have a personal connection to the people and businesses they serve.

How Can a Member Partially Own a Credit Union?

Credit union membership eligibility is based on select common characteristics. A member-owned credit union has an eligibility requirement called its “field of membership.” Members are eligible to join a credit union based on:
  • Where you live – Many credit unions operate to serve people who live in a specific geographic location
  • Who you work for – Some employers sponsor credit unions just for their employees
  • Family members – Most credit unions will allow the families of members to join
  • Being part of a group – Certain credit unions are based on membership in a group like a school, place of worship, labor union, or homeowners’ association
The current trend is for credit unions to broaden their field of membership. Credit unions are open and eager to invite new members, allowing anyone in the community to join.

For example, Power Financial Credit Union has been serving tens of thousands of South Florida members for seven decades and counting. If you live, work, or attend school in 13 South Florida counties, you can qualify for membership at PFCU.

Member-Owned Means Community-Focused

What do credit unions do for their members? Credit unions tend to focus on their local community. They don't have to worry about outside shareholders. Instead, they invest in members and their financial well-being. This doesn't just mean better interest rates but also personalized services, support, and financial education.

Credit unions often join local charity initiatives, offer advice to startups and small businesses, and team up with other organizations to improve their communities. Some credit unions may even have branches within schools.

What does a credit union do to embody its member-first values? This mindset is reflected in governance, with members choosing boards of directors and holding these decision-makers accountable. It's common for CEOs (such as PFCU’s Allan Prindle) to develop connections between their credit union and the community they serve. As a result, members get personal financial relationships that they need but wouldn't get in commercial institutions.

Become a Member of South Florida's Best Credit Union

If you live, work, or go to school in South Florida, you can join Power Financial Credit Union today. Join a community of nearly 35,000 members and enjoy the benefits of a personal member-first approach with a full platform of traditional branches and state-of-the-art digital banking services.

Get all the resources and personalized guidance you need on your journey to financial success and stability, or explore our wide range of affordable banking products designed to reflect the varied needs of the South Florida community, including but not limited to checking accounts, saving products, mortgages, personal loans, and investment options.