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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. Let's explore what member-owned means in practice.

Understanding Credit Union Membership

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 financial benefits they make flow right to their members. 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.

It caters to local businesses and residents to help them succeed financially. You and your credit union live in and support the same community. As a credit union member-owner, you vote for the board of directors and have a voice in many policies.

How Credit Unions Operate

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 services from a credit union 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, which insures banks.

Because of this local nature, 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 access to thousands of locations from coast to coast.

Members have direct access to their money in over 5,300 shared branches in credit unions across all 50 states. This provides members with easy access to their money wherever they go. In fact, that’s more locations than the traditional bank.

Additionally, modern online banking and mobile banking apps give you the ability to securely use your credit union services wherever you are 24/7. Some of the transactions that members can take handle with their devices may include:
  • Digital Wallets – Linking a credit union debit or credit card 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 bills such as utilities, internet, and other monthly payments.
  • eDeposit – Skip the trip to the ATM or branch and deposit checks digitally through the mobile app.
  • Money management tools – Financing and budgeting tools that allow you to view all their financial relationships.
  • Live chat – Get help from customer service agents on a mobile device.
  • Money Transfers­ – Fast, safe and free way to send money.
Credit union members receive the same level of access, products, and digital services that banks offer their customers. The point of differentiation is that the personal connection and level of service are often more personalized.

Because credit unions are smaller, 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.

How Can a Member Partially Own a Credit Union?

Credit union membership eligibility is based on common characteristics. A member-owned credit union has an eligibility requirement called its “field of membership”. Members partially own a credit union based on:
  • Where you live – Many credit unions operate to serve people who live in a certain geographic location.
  • Who you work for – Some employers have credit unions that they sponsor 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.
Credit unions are open and eager to invite new members, allowing anyone residing within 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.

Member-Owned Means Community-Focused

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.

This mindset is reflected in governance as well - credit union boards of directors are chosen by members and are accountable to them. It's common for CEOs (such as 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 almost 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 you need on your journey to financial success and stability.