A corporation formed under special statutory provisions to further thrift among its members while providing credit for them at more favorable rates of interest than those offered by other lending institutions. A credit union is a cooperative association that utilizes funds deposited by a small group of people who are its sole borrowers and beneficiaries. It is ordinarily subject to regulation by state banking boards or commissions. When formed pursuant to the Federal Credit Union Act (12 U.S.C.A. § 1751 et seq. ), credit unions are chartered and regulated by the NATIONAL CREDIT UNION ADMINISTRATION.
A credit union can be distinguished from other financial institutions by the fact that membership is ordinarily restricted to individuals who meet certain residential or occupational criteria. In addition, it can make loans of a more diversified nature than certain institutions, such as building and loan associations.