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What's a Credit Union?

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How is a credit union different than a bank?  Who is eligible to join?  Why do over 96 million Americans trust credit unions as their best financial option?

Read on for answers to those and other frequently asked questions about credit union membership.

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How Is a Credit Union Different Than a Bank?

Credit unions and banks offer very similar financial products and services, but their business models are significantly different.  Banks are privately- or publically-owned, for profit enterprises.  Their purpose is to make a profit for their owners or shareholders.  Credit unions are not-for-profit financial cooperatives that are owned by their members.  Member deposits form a “pool” of funds from which low-cost loans are made to members.  Once expenses are paid and reserves set aside, income from loans is returned to members in the form of dividends, expanded and low-cost services, and cushion against loss.

Can Anyone Join a Credit Union?

Membership eligibility varies from one credit union to another depending on their Charter.  Some credit unions have a single common bond, such as an employer or educational institution, which limits memberships to employees and their families.  Others, like PrimeTrust Federal Credit Union, operate under a “community charter”.  This means that anyone who lives, works, worships, or attends school in our community area (Delaware County) is eligible to become a member.

What Kinds of Services Do Credit Unions Offer?

Product offerings vary by institution, but for the most part credit unions offer the same services as most banks.  PrimeTrust Federal Credit Union offers traditional loan products such as home mortgages, vehicle loans, equity loans, and even loans for commercial real estate and business services.  In addition, deposit products are offered, including a variety of checking and savings options, Certificates of Deposit, and Money Market Accounts.  Many credit unions, including PrimeTrust, have also expanded their offerings to include Visa® credit and debit cards, along with a variety of sophisticated tools for members to access and manage their funds – like Online Banking and Mobile Banking apps for smartphones.

What Advantages Does Membership Offer Versus Being a Customer of a Bank?

The most obvious benefit is a credit union exists solely to benefit our members, not shareholders or the corporate bottom line.  That generally means more favorable rates and terms on the financial products you need and valuable low- and no-fee member financial services.  Additionally, some credit unions, like PrimeTrust, offer a dividend back to members who use specific financial products / services or have multiple accounts with the credit union.  Credit unions also tend to work more closely with members, including offering free financial counseling and a local approval process that favors their members.

Don’t Credit Unions Have Limited Branches and a Small Geographic Footprint?

Not always.  While many credit unions may only have one or a handful of branch locations, many – like PrimeTrust Federal Credit Union – are part of a larger national network of credit unions called Co-op Shared Branching.  Currently, there are over 5,000 branches nationwide – with over 30,000 ATMs – that participate in Co-Op Shared Branching.  That means members are able to access and manage their account from any of these participating locations with the same privileges they enjoy with their hometown credit union.  In addition, many credit unions offer sophisticated tech tools like Online and Mobile Banking that allow members anywhere, anytime access to their money.

How Are Credit Unions Governed?

Unlike most banks, credit unions are member owned and governed.  That means each member enjoys the right to participate in business decisions affecting the credit union.  Important choices aren’t made several states away by a board of directors focused on maximizing shareholder earnings.  In credit unions, a volunteer board of directors is democratically elected by membership to steward the general direction and control of the organization.  Each member receives equal voting rights (one member, one vote) regardless of the amount they have in deposits or savings.

How Do Credit Unions Insure My Money?

Federally insured credit unions provide a stable, secure place for members to save their money.  The National Credit Union Administration (NCUA), an independent federal agency that administers the National Credit Union Share Insurance Fund (NCUSIF) insures credit union deposits of up to $250,000 per deposit.  The insurance provided by the NCUA is similar to the coverage provided to banks by the FDIC.  PrimeTrust Federal Credit Union is federally insured by the NCUA.

PrimeTrust also carries Excess Share (deposit) Insurance helping protect the hard-earned savings of credit union members. This unique program provides up to an additional $250,000 of insurance once a credit union member's balance exceeds the coverage provided by the NCUA.

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