Credit unions are member-owned, not-for-profit financial cooperatives. Credit unions took hold in the United States in 1934 with the passage of the Federal Credit Union Act. They offered a way for  people of ordinary means to borrow at reasonable rates of interest under thoroughly honest and fair conditions.

An individual credit union is organized by a group of people who share a common bond (perhaps the same employer or church or community in which they live) who decide to pool their resources for their common good. Under the guidance of state or federal law, the credit union members elect a volunteer board of directors from the membership to guide the credit union. Profits are returned to the members-owners in the form of higher savings rates, lower loan rates and many free or low cost services. While credit unions offer many or all of the same services as for-profit financial institutions, you'll notice some difference in terminology. Credit union language reflects the fact that members are owners—they're the shareholders in the credit union. Here are some basic credit union terms you'll encounter.

Funds on deposit represent a member's share in the credit union. Thus, a savings account is a share savings account. Members earn dividends on these funds, which are compounded monthly. At a credit union, checking accounts are referred to as share draft checking accounts; term certificates that lock in our highest savings rates for a specified period of time are share certificates. 

The terminology reflects members' shared ownership in the credit union, and use of these terms is guided by federal truth-in-savings regulations. Funds on deposit are insured by the National Credit Union Administration (NCUA), an agency of the federal government. The NCUA Share Insurance Fund is one of the strongest insurance funds available.

Savings are insured to at least $250,000 and backed by the full faith and credit of the U.S. Government: National Credit Union Administration, a U.S. government agency.