What is a credit union?
Credit unions are chartered financial institutions which are authorized to accept deposits, cash checks, make loans, issue credit cards and provide many other financial services to their members. They can provide all of the basic financial services which can be provided by banks, savings banks, and savings and loan associations. In New Jersey, both the federal and state governments charter these institutions.
A credit union is a cooperative, not-for-profit financial institution organized to promote thrift and provide credit to members. It is member-owned and controlled through a board of directors elected by the membership. The board serves on a volunteer basis and may hire a management team to run the credit union. The board also establishes and revises policy, sets dividend and loan rates, and directs certain operations. The result: members are provided with a safe, convenient place to save and borrow at reasonable rates at an institution which exists to benefit them, not to make a profit.
A. A credit union is a nonprofit cooperative financial institution organized and operated for the mutual benefit of its members. The members are the owners of the institution. The membership of a credit union is limited to groups having a common bond of occupation or association or to groups within a well-defined neighborhood, community, or rural district. A person cannot become a member of a credit union unless he or shee belongs to a group that is within a credit union’s field of membership. The field of membership is specified in a credit union’s charter or articles of incorporation. Because credit unions are nonprofit cooperatives, they are exempt from from payment of federal and state income taxes.
A. A credit union is a not-for-profit financial cooperative that is owned and operated by its 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, a larger cushion against loss, etc. After a credit union has met its other goals, it may give any remaining surplus back to the members as bonus dividends on savings or loan interest rebates.
