Federal Employees' Credit Unions Key Terms

Understand federal employee credit union terminology before opening an account

By Virginia Franco, Freelance Writer

Many are surprised to learn that a federal employees' credit union is, in fact, quite different than a traditional bank. Credit unions are not banks. They are cooperatives of groups or individuals united under one umbrella, by virtue of sharing a commonality. While banks and credit unions do share much of the same terminology, credit unions also use terms that are quite unique. It is beneficial to understand the key terms used before opening an account with a federal employees' credit union.

Natural-person credit union

Almost all credit unions insured federally are classified as natural-person credit unions. This means that their membership is comprised of real people or individuals as opposed to corporations.
Try: HowStuffWorks, Inc. explains how natural-person and corporate credit unions work, as well as the differences between them.

Common bond

The members of a federal credit union have membership in the organization by sharing a common bond. For instance, most branches of the armed forces have credit unions whose members share the common bond of serving in the U.S. military.
Try: The Policy Archive includes an article abstract discussing a court case in which a federal credit union was not allowed to expand its membership base by combining common bonds.

Credit committee

The credit committee of a federal employees' credit union does not exist in all instances. This optional internal committee is responsible for reviewing loan and credit line applications. It is not uncommon for a credit union to have a loan officer on staff to handle this responsibility, in which case the credit committee ratifies any applications approved by the loan officer.
Try: In 2008, Missouri's General Assembly revised its statutes pertaining to the duties of a credit committee. The description of the duties does a wonderful job explaining a credit committee's function.

Membership field

A federal employee credit union's membership field is the type of membership that it serves. For instance, an "education" credit union usually serves individuals and families with ties to U.S. schools or universities.
Try: FindLaw includes an article discussing rules put forth in 2003 by the National Credit Union Administration allowing credit unions to expand their membership fields to increase their rosters. This article further explains the key terms "membership field" and "common bond".

National Credit Union Share Insurance Fund

The National Credit Union Share Insurance Fund (NCUSIF) is the federal share insurance fund for credit unions. Comparable to the FDIC, which protects traditional banks, the NCUSIF protects members' shares in credit unions chartered by states and the federal government. Individuals' shares are protected up to $100,000.
Try: The National Credit Union Association (NCUA) website provides a detailed explanation of the insurance fund.

Supervisory committee

The supervisory committee of a federal employees' credit union is another internal committee. Unlike the credit committee, the supervisory committee is not optional and is responsible for overseeing the credit union's financial operations. In addition, the supervisory committee arranges internal and external audits.
Try: Addison Avenue Federal Credit Union's website describes the responsibilities of its supervisory committee.