A credit union is a financial cooperative.
People who share a common bond, such as employer, an association, or a community group, join together in a not for profit organization for the purpose of doing business with one another. They save their money in a common fund, borrow against those funds with low-cost loans and receive other financial services at little or no cost.
More people are joining credit unions today than ever before. That’s because credit unions are member-owned. When you open an account at a credit union, you become one of the owners of a cooperative institution, and as such you are entitled to a say in how the credit union is run.
Although credit unions are not for profit, members still earn dividends on their savings and checking. After expenses and required reserves are met, the earnings of the credit union are returned to the members in the form of dividends. Credit unions are usually able to offer higher dividends on savings and lower rates on loans and other services than other financial institutions may be able to do because credit union financial return is used for the benefit of the membership
Credit unions are not credit bureaus, labor unions, loan companies or finance houses. They are financial institutions incorporated under state or federal laws to provide services to their members.
So why should you join a credit union?
Because credit unions are people-oriented. Each year, unbiased research shows that consumers are far happier with the personal service available from credit unions than from other financial alternatives. That’s because credit unions are member-owned.
What is the credit union difference?
New federal laws and regulations are changing the structure and face of the financial services industry. In this time of accelerating change, it is important to truly understand how credit unions are unique and different, and why credit unions must remain a necessary and extremely popular financial alternative for many Americans.
Kern FCU is a not-for-profit financial cooperative. We exist to serve our members, not to make a profit. Unlike most other financial institutions, credit unions do not issue stock or pay dividends to outside stockholders. Instead, earnings are returned to our members in the form of lower loan rates, higher interest on deposits, and lower fees.
Credit unions do pay taxes - payroll taxes, real estate taxes, and some other property taxes. Congress exempts credit unions from federal income taxes. The exemption was established in 1937, affirmed by statute in 1951, and re-affirmed in 1998 in H.R. 1151, the Credit Union Membership Access Act which states:
"Credit unions, unlike many other participants in the financial services market, are exempt from Federal and most State taxes because credit unions are member-owned, democratically operated, not-for-profit organizations generally managed by volunteer boards of directors, and because they have the specified mission of meeting the credit and savings needs of consumers, especially persons of modest means."
Credit unions are economic democracy at work. Each credit union member has equal ownership and one vote - regardless of how much money a member has on deposit. At a credit union, every member is also an owner.
Kern FCU is governed by a board of directors, elected by and from the credit union's membership.
By current federal statute, credit unions cannot serve the general public. People qualify for a credit union membership through their employer, organizational affiliations like churches or social groups, or a community-chartered credit union.
Financial Education for Members
Credit unions assist members to become better-educated consumers of financial services. Additionally, CUNA is partnering with the National Endowment for Financial Education, a not-for-profit foundation, to expand financial education among high school students. A national study shows that just ten hours of personal finance education can positively affect students' spending and savings habits for a lifetime.
Social Purpose: People Helping People
Credit unions exist to help people, not make a profit. Our goal is to serve all of our members well, including those of modest means - every member counts. Our members are fiercely loyal for this reason. They know their credit union will be there for them in bad times, as well as good. The same people-first philosophy causes credit unions and our employees to get involved in community charitable activities.