Q. What is a credit union?
A. A credit union is a not-for-profit financial institution that is owned and run by its members. The board of directors are democratically elected by the membership. All members of the credit union have one vote, regardless of the amount on deposit. The prime function of the credit union is to serve its members. Credit unions focus on the needs of all their members instead of a limited number of stockholders.
Q. Why are credit unions important?
A. Credit unions give a competitive edge to the marketplace by offering favorable rates and affordable services. In turn, they create benefits to consumers of all financial institutions.
Q. Why should I choose a credit union?
A. Most importantly, you have the ability to choose where you conduct your banking. Credit unions focus on their members and give more personalized service. Typically, credit unions return their profits to the members by giving higher savings rates, lower loan rates and additional services.
Q. Are my funds insured at a credit union?
A. All funds deposited at credit unions are federally insured up to $100,000 by the National Credit Union Administration (NCUA), an agency of the Federal Government. Service Plus CU accounts are insured for an additional $250,000 by a private share insurer, American Share Insurance. Service Plus CU members' funds are insured for a total of at least $350,000.
Q. Who regulates credit unions?
A. State-chartered credit unions like Service Plus CU are regulated and examined by the California Division of Financial Institutions. Additionally, federally-insured credit unions, including Service Plus CU, are examined 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 business lending, credit unions must adhere to more strict regulations than banks do.
Q. Do credit unions pay taxes?
A. State 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 mandatory reserves are returned to the members in dividends, products and/or enhanced services. 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."
