Frequently Asked Questions

What is a credit union?

A credit union is owned by the people it serves and exists solely to serve these members, not to maximize profits to enrich an outside group of stockholders. Credit unions operate on a not-for-profit basis and focus on the needs of all of their members, rather than a limited number of shareholders. At credit unions, members have equal voting rights, regardless of the amount on deposit.

Why are credit unions important to the rest of the financial system?

Credit unions have a special niche in the marketplace. Credit unions place competitive pressure on all financial institutions to offer consumers favorable rates and services. This healthy check benefits all consumers of all financial institutions.

Who are members of credit unions?

Nearly 90 million Americans are members of credit unions.*

Why would I choose a credit union?

The ability to choose where consumers entrust their money is fundamental. Consumers typically find lower or no fees, higher saving rates, lower loan rates, and more personalized service at credit unions. As a result, credit unions continually score higher than other financial institutions, in consumer satisfaction surveys.

Are my funds safe at a credit union?

All funds deposited at a credit union are federally insured to at least $250,000 and backed by the full faith and credit of the United States Government. The National Credit Union Administration (NCUA), an agency of the Federal Government. Credit unions support the operations of the National Credit Union Share Insurance Fund (NCUSIF) by maintaining deposit with the fund equal to a percentage of their insured savings. If events occur that cause the NCUSIF's equity ratio to fall below 1%, responsibility to immediately replace the fund would lie on credit unions-not the taxpayer.

Who regulates credit unions?

The State's Department of Financial Institutions regulates state-chartered credit unions. Federally chartered credit unions, like Mountain America, are regulated by the National Credit Union Administration (NCUA), an agency of the Federal Government. Credit unions are subject to much of the same consumer regulations as other financial institutions. In some cases, such as investments and mortgage and business lending, credit unions must adhere to more strict regulations.

Do credit unions pay taxes?

Credit unions pay payroll, property, and sales taxes, as well as various licenses and fees. By law, they are exempt from paying income tax because all monies earned after operating expenses and setting aside statutory reserves are returned to members. As not-for-profit institutions, they return excess earnings to members-rather than an outside group of stockholders--in the form of higher savings rates, lower loan rates, and lower or no fees. Big or small, every credit union shares this not-for-profit structure and service-oriented philosophy of "not-for-profit, not for charity, but for service."

How do credit unions raise capital?

Credit unions do not have the ability to generate capital for operating funds through the sale of stocks to shareholders. Instead, credit unions raise capital by receiving deposits from members, and by repayment of loans made to members.

Why aren't credit unions legally required to comply with the Community Reinvestment Act (CRA)?

The CRA was designed because Congress found that some banks were ignoring the needs of people in their communities. Credit unions, by the nature of their cooperative structure and service-oriented philosophy, already play a vital role in the development of the communities in which they exist. Credit unions help members improve their economic lives through wise use of financial resources. In partnership with credit unions, members learn to become financially responsible and self-sufficient.

Are credit unions growing?

The credit union industry displayed growth across all major categories during 2008. Credit unions posted the fourth highest loan volume on record. The primary driver of outstanding loan growth was the 11.5% growth in real estate loans, including 14.8% in first mortgage originations. The industry also captured record lending as well. There are over 7,900 credit unions in America.

Why do credit unions want to expand their fields of membership?

To honor their long-standing commitment of strength and viability to existing long-term members, credit unions need to gain additional members. The inability to expand membership or client base would damage any financial institution or business. All financial institutions need the flexibility to adapt to the changing community and economy in order to remain economically viable. Credit unions were originally organized around employer groups as a mechanism to facilitate chartering and growth. By expanding their fields of membership, credit unions can retain their unique function and better serve not only their members, but also all members of the community.

* According to Credit Union National Association, December 2008