What is a Credit Union?

A credit union is a financial institution that works differently from a bank.

Individuals join as members of a credit union because of a region they live in or company they work for. Credit unions typically offer the same services as banks, including deposits, loans and mortgages at lower rates.

The reason credit unions can offer lower rates than banks is because they are not for profit organizations. This means that credit unions do not have to pay taxes and can offer fewer fees and lower rates to members.

Being a member of a credit union also has the advantage of owning a portion of the company, and receiving a portion of the profits. Members are also able to vote on important matters in the credit union, including the Board of Directors.

Have You Heard The News? Relax, You're Protected!

Credit Unions as a whole have sucessfully escaped the banking meltdown and lending crisis. 

Two corporate credit unions were siezed by federal regulators in order to protect deposits. The credit unions in question, US Central Federal Credit Union and Western Corporate Federal Credit Union, were merely clearinghouses which offered loans and services to retail credit unions. Both credit unions were at risk, but the deposits were always protected by the NCUA for up to $250,000.

Members of Credit Unions should not be alarmed at this news. This is a case of the NCUA working for you to protect your money. The National Credit Union Association (NCUA) insures credit union deposits the same way the FDIC insures bank deposits. Both have increased their coverage from $100,000 to $250,000 until December 31, 2009. As long as your credit union is covered by the NCUA, your deposits are safe. 

Tropical Financial Credit Union is federally insured by the NCUA for up to $250,000.