About Credit Unions
What is a Credit Union?
A not-for-profit organization that serves members.
In the United States, credit unions are not-for-profit organizations that exist to serve their members rather than to maximize corporate profits. Like banks, credit unions accept deposits and make loans. But as member-owned institutions, credit unions focus on providing a safe place to save and borrow at reasonable rates. Unlike banks, credit unions return surplus income to their members in the form of dividends.
Favorable Rates and Customer Service
Fees and loan rates at credit unions are generally lower, while interest rates returned are generally higher, than banks and other for-profit institutions. Credit unions are democratically operated by members, allowing account holders an equal say in how the credit union is operated, regardless of how much they have invested in the credit union.
NCUA Share Insurance Coverage
Federally insured credit unions are regulated by the National Credit Union Administration and backed by the full faith and credit of the United States government. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 increased the share insurance coverage on all federally insured credit union accounts up to $250,000.
Credit Union Myths
Lots of misconceptions are out there about credit unions. Let us help you separate the myths from the facts, so you know what credit unions are and what they are not.
Credit unions are not insured like banks through the FDIC.
Fact – All credit unions are federally insured by a fund that, like the FDIC, is backed by the full faith and credit of the U.S. government. The National Credit Union Share Insurance Fund (NCUSIF) is administered by the National Credit Union Administration (NCUA), an agency of the federal government.
redit unions are not as convenient as national banks.
Fact – MUNA is centrally located in Lauderdale County and members can connect to their accounts anytime, anywhere using our free It’s Me 247 Online Banking or Apple or Android apps. Plus as a member of MUNA, you have access to ATMs throughout the area, and coast to coast.
You have to be employed by a certain workplace to be a member of a credit union.
Fact – People should not be discouraged by a credit union’s name! While it is true that credit unions were once restricted to people with a “common bond” (such as military member and families in our early days), it is now easier than ever to join most credit unions! Many credit unions, including MUNA, have community charters, allowing them to serve anyone who lives, works, worships or attends school within a defined area.
You have to pay a membership fee to join a credit union.
Fact – It is true that an initial deposit of $25 is required to open a base share account at MUNA, but then as a member you become a part-owners of MUNA. Members have an equal voice in voting for the elected volunteer Board of Directors, who in turn, provide the strategic direction of the organization. Should a member choose to close their Credit Union account, their original $25 deposit is returned.
Credit unions do not offer commercial loans.
Fact – Many credit unions offer business loans, including MUNA. MUNA offers various types of commercial products, commercial loans, business savings and checking services and more.
Credit unions are not as stable as banks.
Fact – Historically, credit unions have been more stable than banks and this fact has been consistent even throughout the course of any economic downturn. As a whole, credit unions are healthy, with strong balance sheets. Credit unions are well capitalized with solid overall capital-to-asset ratios. In recent times, credit unions have experienced relatively low delinquency rates and lower loan net charge offs than that of the nation’s banks.
Credit unions are lending responsibly as they operate more conservatively and have high asset quality and high capital ratios. According to the Credit Union National Association (CUNA), savings at credit unions grew even during the economic turndown. This is because more people are seeking to put their money in a stable source offering good rates and are therefore turning to credit unions to do so instead of banks.