Federal Credit Union - Explained
What is a Federal Credit Union?
If you still have questions or prefer to get help directly from an agent, please submit a request.
We’ll get back to you as soon as possible.
- Marketing, Advertising, Sales & PR
- Accounting, Taxation, and Reporting
- Professionalism & Career Development
Law, Transactions, & Risk Management
Government, Legal System, Administrative Law, & Constitutional Law Legal Disputes - Civil & Criminal Law Agency Law HR, Employment, Labor, & Discrimination Business Entities, Corporate Governance & Ownership Business Transactions, Antitrust, & Securities Law Real Estate, Personal, & Intellectual Property Commercial Law: Contract, Payments, Security Interests, & Bankruptcy Consumer Protection Insurance & Risk Management Immigration Law Environmental Protection Law Inheritance, Estates, and Trusts
- Business Management & Operations
- Economics, Finance, & Analytics
Table of ContentsWhat is a Federal Credit Union?How Does a Federal Credit Union Work?Mutual Company StructureProducts Offered
What is a Federal Credit Union?
A federal credit union is regulated by the National Credit Union Association (NCUA). This credit union offers banking services such as online banking, bill payment, checking accounts, issuance of loans, mortgages, and others. As established by the Federal Credit Union Act of 1934, NCUA supervises the activities of a federal credit union. The Federal credit union in the United States has its headquarters in San Antonio, it is the responsibility of the NCUA to charter credit unions.
How Does a Federal Credit Union Work?
It is important that Federal credit unions are chartered and supervised by NCUA, individuals, professionals and corporate organizations can access a list of charted credit unions on the NCUA website. The services offered by federal credit unions are similar to those offered by chartered banks both at the state and national levels. The major distinct factor about federal credit unions is that they operate as co-operatives or mutual companies.
Mutual Company Structure
Federal credit unions are also called mutual companies, these companies have different structures and their membership criteria vary. As a mutual company, the federal credit union in the United States is run as a cooperative which means it is owned by its members. The major membership requirements for federal credit unions is that participants must have affiliations or be members with registered associations and unions such as the federal employee unions, teachers unions, labor union, and many others. The amount of money each member of a federal credit union contributes or deposits determines the number of shares they own. Hence, there is a minimum amount an individual must deposit before he can be regarded as a member of a federal credit union. Deposits made into federal credit unions in the United Stat are guaranteed by the U.S. Treasury or FDIC.
The services and products offered by federal credit unions are similar to those of traditional or commercial banks. Such services and products include online banking, bill payment, checking accounts, loans, and mortgages. In addition to these products and services, federal credit unions offer customized products that are of interest to members. Usually, members of credit unions enjoy higher interest rates on the savings they make and lower interest rates on loans they borrow. There are other benefits that members of credit unions enjoy, these are not available to non-members.