why do credit unions limit membership?

**Epidemic** · July 16th, 2012, 10:35 AM

There are rules on the books that require a credit union to limit their membership to a certain group of people.

What possible buisiness model wants to limit their members to a select group of people?

it seems like they are required by law to keep membership restricted. Who does that law protect?

is there an American citizen bank or American resident bank where membership is open to virtually all?

**Chuckiechan** · July 16th, 2012, 11:43 AM

First of all to be a CU, you can't be a bank as recognized by the Federal Banking rules. So there are a variety of convoluted rules to make CU's "not banks" so they can have their own sandbox.

**Steve R Jones** · July 16th, 2012, 12:53 PM

Originally Posted by Epidemic

There are rules on the books that require a credit union to limit their membership to a certain group of people.

Please provide links to back that claim up

While you're at it-> Google-> Credit Unions vs. Banks

**Steve R Jones** · July 16th, 2012, 01:17 PM

Here Epi - I helped you out

Membership guidelines broader than you think
Unlike banks that are open to anyone, laws require credit unions to have a defined field of membership, which means you'll have to be a member of that group to access the credit union and its services. The field of membership can be broad, including an employer, church, school, community and employee group.

Gaining access through an employer is the easiest way to become a member, but community-based credit unions are also widely available in many cities and towns across the country.

"Out of the 8,000 credit unions, almost 25 percent are community-based," says Jim Hanson, vice president at The Credit Union National Association, or CUNA, the Washington, D.C., and Madison, Wis., trade association. "The vast majority of consumers, especially in large communities and cities have an opportunity to join a credit union."

**Epidemic** · July 16th, 2012, 03:44 PM

laws require credit unions to have a defined field of membership

You can almost certainly find a credit union that you can join. But I just wondered what the logic was behind a law that forces the credit union to restrict access to certain citizens.

your quote far from assists me, your post only confirmed what I have seen.

I don't mind the credit union specifying for whatever reason they want to restrict to one group or another. but the fact that they appear to be forced by law to select and stick to a group seems like it might be pandering to the banks.

I find it interesting that there does not seem to be a good business case for restricting access to your business, and it does not seem to benefit the public restricting my ability to choose the business that best meets my needs.

Lets say Navy Federal CU is only open to government/military/military contractors but they have XYZ features I want (free checking, brick and mortar buildings). A law that makes me have to choose a Credit union/bank that does not have free online bill payment or only has blue check does not seem to help me out.

**Steve R Jones** · July 17th, 2012, 04:49 AM

Think positive. I don't think they "restrict" membership to certain groups - they OFFER membership to certain employers etc since they are a Private entity.

Out of the 8,000 credit unions, almost 25 percent are community-based.

That means entire cities are eligible to join.

I'm a member of Texas Federal... They invite all federal employees and even the people that work in the cafeteria in their main building AND a really large list of local employers.

They have a form for potential employers the fill out and be considered.

**Epidemic** · July 17th, 2012, 07:34 AM

Again no matter how you look at it. Whether from the positive we offer service to this group of people or the negative they restrict access, there is still law that says they have to stick to their select group and not server a wider base. So if the Credit union of my choosing wanted to do business with me they can not.

**Steve R Jones** · July 17th, 2012, 08:27 AM

But you're a smart guy and you'll figure out just how easy it is to get into the CU of your choice.

**Chuckiechan** · July 17th, 2012, 11:03 AM

You can "know" someone who is a "member"....

This is all about keeping the banking system at bay. The banks would love to kill off the credit unions.

**Mikev2.0** · July 17th, 2012, 11:52 AM

Originally Posted by Chuckiechan

You can "know" someone who is a "member"....

Yup! I have a Navy Federal Credit Union account and believe my girlfriend can open a NFCU account.

**Epidemic** · July 17th, 2012, 02:13 PM

Originally Posted by Chuckiechan

You can "know" someone who is a "member"....

This is all about keeping the banking system at bay. The banks would love to kill off the credit unions.

I suspect that you have it right there Chuckie. We put restrictions on it because CU's could very well kill conventional banking while offering all the same services for less. Our government is protecting us or taking kickbacks from the banks to keep from being obsoleted.

if it were not for our government saving us from choice, we would have a problem with decentralization of the too big to fail banks.