A credit union is a member-owned, not-for-profit financial institution that accepts deposits, makes loans, and offers other financial services. Unlike a bank owned by shareholders, a credit union is owned by the people who use it. Membership is subject to eligibility rules, and the institution’s fees, rates, services, and insurance status depend on the specific credit union.
How does a credit union work?
Credit unions are cooperatives: members deposit money, borrow, and use other services while collectively owning the institution. The National Credit Union Administration (NCUA) describes the connection simply: “One member’s savings becomes another member’s loan.” Member deposits help fund lending and investments.
Because a credit union is not-for-profit, it may return surplus to members through lower fees, higher savings rates, or lower loan rates, as the NCUA explains in its 2025 Annual Report. That describes the model, not a guarantee: any particular credit union may or may not offer better terms than a bank.
Members have a say in governance
In a federal credit union, each member has one vote regardless of how many shares they hold, and members elect the board. This democratic structure distinguishes membership from simply holding an account at a financial institution.
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Who can join a credit union?
A credit union’s charter defines its “field of membership”—the people eligible to join. Eligibility may be based on an employer, family relationship, geographic area, or membership in a particular group. Rules differ by institution, so check the credit union’s requirements before applying. The NCUA’s field-of-membership guidance explains how these eligibility categories work.
Joining requirements, including any minimum deposit or share requirement, are set by the individual credit union. Do not assume one institution’s rules apply to all credit unions.
What services do credit unions offer?
Many credit unions provide familiar financial services, though the exact selection varies. Common offerings include:
- Savings and checking accounts
- Time deposits, such as share certificates
- Loans
- Other financial products and services, depending on the institution
Credit unions often use the word “share” for a member’s deposit account: examples include share savings, share draft (checking), and share certificate accounts. The term reflects the member’s relationship to the cooperative and is also used in deposit-insurance rules. It does not mean the member owns publicly traded stock.
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Both credit unions and banks can offer deposit accounts and loans. The clearest way to compare them is to look at the specific institutions available to you rather than assume one type is always cheaper or better.
| What to compare | What to check |
|---|---|
| Eligibility | Whether you qualify for membership and what joining involves |
| Account costs | Fees, minimum balances, and other account requirements |
| Rates | The savings and borrowing rates on products you would actually use |
| Access | Branch, ATM, and digital banking availability that suits your needs |
| Insurance | The institution’s insurance status and the coverage rules for your account ownership |
Rates, fees, and access vary by institution. Compare current account terms and services directly before deciding.
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Are credit union deposits insured?
For federally insured credit unions, the standard share-insurance limit for single-owner accounts is $250,000 per member-owner at each insured credit union, subject to applicable requirements. The NCUA administers the National Credit Union Share Insurance Fund. Joint accounts, IRAs and certain other retirement accounts, and trust accounts have separate ownership-category rules; coverage is aggregated within each category at each institution, rather than multiplied simply by opening more accounts in the same category.
Not every credit union is federally insured. Some state-chartered credit unions use private share insurance, so check an institution’s status rather than assuming federal coverage. The NCUA provides a Credit Union Locator and a Share Insurance Estimator to help verify status and estimate coverage for different account arrangements. Federally insured institutions must display the NCUA insurance sign.
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The Share Insurance Fund does not protect stocks, bonds, mutual funds, insurance products, annuities, municipal securities, safe-deposit-box contents, or digital assets. For detailed ownership-category rules, see the NCUA’s share-insurance coverage guidance.
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