Understanding Credit Union Terminology

A glossary of terms to help you better understand credit unions and how they work.

You’ve heard that credit unions are better than banks, so you decide to investigate. Immediately, you’re met with a panoply of terms you don’t understand. What are “insured shares”? What’s a “share draft”? And what is a “field of membership”?

Don’t be overwhelmed. These terms are neither fancy nor scary and to help you make sense of them, we’ve put together a handy guide to some of the parlance unique to the credit union industry.

Field of Membership—A credit union’s field of membership is simply the definition of who is eligible to join that particular credit union.

Charter—Field of membership is based on a credit union’s charter, which defines precisely who can become a member. There are three types of federal charters: Single Common Bond, which is based on occupation or association membership; Multiple Common Bond, which includes multiple groups; and the Community charter, which is based on geography.

Member—You don’t become a customer at a credit union; you become a member. Credit unions are financial cooperatives, meaning that when you join a credit union, you become part of its ownership and get a vote at the credit union’s annual meeting. To become a member of a credit union, you must meet the credit union’s field of membership requirements.

NCUA—The National Credit Union Administration (NCUA) is like the FDIC, except for credit unions. The agency is charged with regulating all federal credit unions, including insuring deposits and looking out for the wellbeing of members.

Share Account—A share account is simply a savings or checking account at a credit union that establishes you as a member-owner of the institution.

Share Draft—A share draft is the credit union version of a check, and a share draft account is a checking account.

Insured Shares—Your account shares at a credit union are insured by the NCUA up to $250,000, the same as if the account were at a bank and insured by the FDIC.

Shared Branching—If your credit union is a member of a shared branch network, you may conduct business at any other credit union that also is a member of that network.

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Ok, now that you understand the essentials, time to find your credit union and join it!