What is a Credit Union?

A credit union has a field of membership and not everyone can simply walk up and open an account. Mattel Federal Credit Union serves the employees of Mattel, Fisher-Price, and American Girl. In addition, the field of membership includes immediate families of members. Other credit unions have membership defined by a geographical area such as a city or county and others by specialized vocation such as healthcare professionals. Anyone outside the field of membership may not become a member, but once you are a member you will always be a member even if you no longer work within the field of membership.

A credit union is a cooperative wherein its members are its owners. The general membership is represented by an elected board of directors who are members themselves and serves without compensation for their time. Each member, regardless of their balances on their accounts, gets to cast one vote and are eligible to be nominated as a director. Unlike for-profit financial institutions the main focus of a credit union as an institution is not for profit. Its main focus is to ensure its financial stability and sustain its growth to continually provide financial products and services to its members. In the process of doing business the credit union does make a profit, however a credit union's profit does not go into the pocket of shareholders or select individuals. It goes back to the credit union in the form of capital to further its stability as an institution, to new products and services, or back to the general membership in the form of higher dividends, lower loan rates, and lower fees.

As a Mattel Federal Credit Union member, you can take advantage of lower rates, higher savings dividends, and low or no fees. Such benefits are available to members, in part, because Congress granted credit unions a long-standing exemption from taxation, and with good reason. Not-for-profit credit unions return profits to members, and are led by an all-volunteer Board of Directors who are not compensated for their services. Credit unions also help the financially under-served, including members with below-average incomes, or those with limited or damaged credit. Banks, however, earn billions in profit from customers of their choosing, and pass those profits on to stockholders.

The American Bankers' Association claims that the tax exemption gives credit unions an unfair advantage in the marketplace and hurts banks. But statistics tell a different story: Federally insured credit unions had $662.4 billion in assets as of March 31, 2005. FDIC-insured institutions held over $10.2 Trillion in assets, and last year these institutions grew by an amount that exceeds the total assets of all credit unions combined. Additionally, the growth of not-for-profit credit unions is a direct result of keeping our promise to serve the financially under-served.

Historically, credit unions have had broad support from Congress. In fact, Congress reaffirmed the tax exemption status of credit unions in 1998. However, led by the Bankers' Association, a subcommittee of the House Ways and Means Committee met last November with the sole intention of reviewing the credit unions' tax exempt status. For now, no recommendation has been made. But if our tax-exemption were revoked, our not-for-profit status and your credit union advantage would be in jeopardy. As in all financial matters that affects you, we will keep you informed about this issue and work hard to protect your interests. A credit union is a financial institution. Similar to other financial institution, a credit union can offer a wide range of products and services such as savings (regular shares), checking (share draft), certificates of deposits (share term certificates), loan products, and much more. Other than the name of the products, there is not much of a difference between products by a credit union and a bank. So, what makes a credit union different from other financial institutions?