A credit union is a financial institution that caters to a group of people with common interests, similar professional backgrounds or shared geography. The assets of a credit union’s members are pooled to provide financial services, such as loans, checking accounts and savings accounts, to one another. According to the National Credit Union Administration (NCUA), there are about 7,950 federally insured credit unions in the United States with nearly 90 million members.
Whether you are a member of a credit union or deal primarily with a bank, your Tampa CPA at Reliance Consulting, LLC is here to guide you through the sometimes-baffling world of finance. For instance: How, exactly, is a credit union different from a bank?
The biggest difference is a credit union is a not-for-profit institution. The Federal Credit Union Act, signed by President Franklin D. Roosevelt in 1934, was a government response to the Great Depression and was designed to “promote thrift and thwart usury.” In essence, it built upon the then-new concept of a “people’s bank,” a cooperative that allowed the general public to borrow money in a time when it was difficult to borrow from traditional banks.
Your Tampa CPA at Reliance Consulting can go into greater detail about what it means to join a credit union, but in general, a credit union:
- Is owned by members, not investors
- Has a board of directors that is elected democratically – one member, one vote
- Directs its profits are toward lower interest rates for loans and higher return on savings accounts
- Is insured on accounts of up to $250,000 by the NCUA, rather than the Federal Deposit Insurance Commission
- Is exempt from most state and federal taxes
The Tampa Bay area has many credit unions to choose from, so there’s a good chance that you can qualify for membership at a credit union near you. Contact a Tampa CPA at Reliance Consulting today for a free financial health checkup and to learn more about the advantages of conducting financial transactions with a credit union.