What is a credit union?

It is important to know about your financial institution.

Credit union spelled out with Scrabble letters
Photo by LendingMemo.com under CC 2.0

Michigan State University Extension and Michigan 4-H teach youth about financial literacy. Michigan 4-H currently has a grant through Chemical Bank and the Michigan 4-H Foundation to focus on financial literacy. One of the intended outcomes is to provide youth with opportunities to increase their personal financial knowledge, to practice money management skills and in turn apply these skills and knowledge to become financially smart and secure. Part of financial knowledge is knowing where you put your money.

Credit unions are one type of a financial institution where you may put money. Credit unions accept deposits, make loans and provide a wide array of other financial services. Credit unions provide a safe place to save and borrow at reasonable rates.

As a credit union member, you are part owner. Credit unions are member-owned and cooperative institutions. They are owned and controlled by the people, or members, who use their services. A volunteer board of directors is elected by members to manage a credit union.

Members of a credit union share a common bond, also known as the credit union’s “field of membership.” You may be able to join based on your employer, family, geographic location or membership in a group. According to the National Credit Union Administration, membership in federally insured credit unions grew to 103.7 million in the first quarter of 2016, an increase of 3.8 percent from the first quarter of 2015.

Credit unions are not for profit organizations. Any profit made by a credit union is returned to the members. This can be done through incentives, reduced fees, higher saving rate and lower loan rates.

Michigan State University Extension and Michigan 4-H Youth Development help to prepare young people for successful futures. As a result of career exploration and workforce preparation activities, thousands of Michigan youth are better equipped to make important decisions about their professional future, ready to contribute to the workforce and able to take fiscal responsibility in their personal lives.

As a part of our work, Michigan State University Extension provides programming for financial literacy. To learn more about the positive impact of MSU Extension and Michigan 4-H career preparationmoney management and entrepreneurship programs, read the Impact Report: “Preparing Michigan Youth for Future Employment.”

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