Credit Union Glossary

Annual Percentage Rate — the annualized cost of a loan expressed as a percentage, including interest and most mandatory fees (origination fees, etc.) but not optional fees. APR is required to be disclosed under the Truth in Lending Act (Regulation Z) and allows borrowers to compare loan costs across lenders. For credit cards, APR is the annual interest rate without compounding. APR is distinct from APY, which applies to deposit accounts.

Annual Percentage Yield — the effective annual rate of return on a deposit account, taking into account the effect of compounding interest (or dividends). APY is always equal to or higher than the stated nominal rate. Federal Regulation DD requires financial institutions to disclose APY on all deposit products, enabling apples-to-apples comparisons across institutions regardless of compounding frequency.

A size category for credit unions based on total assets, used for regulatory and analytical purposes. Common tiers used in industry analysis: under $10M (micro), $10M–$100M (small), $100M–$500M (medium), $500M–$1B (large), $1B+ (mega). Asset tier affects regulatory requirements, product sophistication expectations, and peer group comparisons. Larger credit unions generally offer more products and technology but may be less community-focused.

An ATM that does not charge a surcharge fee to non-member users. Most credit unions participate in surcharge-free ATM networks (CO-OP, Allpoint, or MoneyPass) that give members access to tens of thousands of fee-free ATMs nationwide. When using an in-network ATM, members pay no surcharge; the credit union may also reimburse any fees charged by the ATM owner.

A secured loan used to finance the purchase of a vehicle, with the vehicle serving as collateral. Credit unions are among the most competitive auto loan lenders in the US, typically offering rates below bank and dealer financing. Terms range from 24 to 84 months. Getting pre-approved for a credit union auto loan before visiting a dealership provides negotiating leverage on vehicle price.

The quarterly financial report that every federally insured credit union is required to submit to the NCUA. Formally called the Credit Union Profile and Financial Performance Report (Form 5300 for large credit unions or Form 5300S for smaller ones), call reports contain hundreds of data fields covering assets, liabilities, capital, income, loans, membership, and branch information. The data is publicly available at ncua.gov.

An acronym for the six components of the NCUA's credit union examination rating system: Capital adequacy, Asset quality, Management, Earnings, Liquidity, and Sensitivity to market risk. Each component is rated 1 (strongest) to 5 (weakest), and a composite CAMELS rating is assigned. CAMELS ratings are confidential and not publicly disclosed, but they drive regulatory actions and supervisory priorities.

A measure of whether a credit union's capital (net worth) is sufficient to absorb potential losses and continue operating safely. The NCUA evaluates capital adequacy as part of its CAMELS examination framework. The primary metric is the net worth ratio, with regulatory minimums established under the Prompt Corrective Action rules. Capital adequacy is the 'C' in the CAMELS rating system.

At credit unions, called a 'share certificate' rather than a certificate of deposit. A time deposit where the member agrees to leave a specified amount on deposit for a fixed term (typically 3 months to 5 years) in exchange for a guaranteed, fixed dividend rate. Early withdrawal triggers a penalty. Share certificates are NCUA-insured and typically offer higher rates than liquid savings accounts.

A unique identification number assigned by the NCUA or state regulatory agency to each credit union at the time of chartering. Federal credit union charter numbers are assigned sequentially by the NCUA. The charter number is used in regulatory filings, NCUA database searches, and as a permanent identifier for the institution.

A cooperative financial services network owned by credit unions that provides shared ATM access (30,000+ surcharge-free ATMs through the CO-OP ATM network) and shared branching (5,600+ participating credit union branches). CO-OP Financial Services operates the largest credit union ATM and branch-sharing network in the US. Many credit union mobile apps include a CO-OP ATM/branch finder.

The shared characteristic that historically defined credit union membership eligibility — for example, working for the same employer, living in the same community, or belonging to the same association. The common bond requirement is enshrined in the Federal Credit Union Act and is the legal basis for the field of membership concept. Community charters use geographic proximity as the common bond.

A credit union charter type that defines membership eligibility by geography rather than employer or organizational affiliation. Members must live, work, worship, or attend school in the defined community area. NCUA regulations allow community charters to cover counties, cities, metropolitan statistical areas (MSAs), or rural districts. Community charters have become the most common charter type for new credit unions.

Credit Union Service Organization — a for-profit entity owned by one or more credit unions that provides products or services to credit unions and their members. CUSOs allow credit unions to offer services that fall outside their direct charter authority, such as insurance brokerage, investment advisory, mortgage origination, payroll processing, and technology platforms. CUSO investments and loans are regulated by the NCUA.

The percentage of a credit union's total loans that are past due, typically measured for loans 60 days or more delinquent. Calculated as Total Delinquent Loans ÷ Total Loans Outstanding × 100. A rate below 1% is considered excellent; rates above 3% may signal deteriorating loan quality. High delinquency rates pressure earnings and can erode net worth over time.

The credit union equivalent of interest paid on deposit accounts. Dividends are paid on share accounts, share draft accounts, money market accounts, and share certificates. The rate is expressed as an APY (Annual Percentage Yield). Because credit unions are not-for-profit, dividends represent the return of earnings to member-owners. Dividend income for members is taxed as ordinary interest income by the IRS.

A fee charged when a member withdraws funds from a share certificate before its maturity date. Penalties are designed to compensate the credit union for the lost interest income and to discourage premature withdrawals. Typical penalties range from 60 days of dividends for 3–6 month certificates to 180 days or more for 5-year certificates. The penalty amount and method must be disclosed at account opening.

A credit union chartered by the National Credit Union Administration (NCUA) under the Federal Credit Union Act. Federal credit unions must include 'Federal Credit Union' in their legal name. They are federally insured by the NCUSIF, regulated and examined by the NCUA, and must follow federal rules on field of membership, lending limits, and operations. As of 2025, roughly half of all US credit unions hold federal charters.

The legal definition of who is eligible to join a credit union. Federal law requires every federally chartered credit union to have a defined field of membership based on a 'common bond.' The three primary types are: community (live, work, or worship in a defined geographic area), occupational (employees of a specific employer), and associational (members of a qualifying organization). Once a member, eligibility is retained indefinitely.

Guaranteed Asset Protection insurance — an optional add-on for auto loans that covers the 'gap' between what an insurance company pays for a totaled or stolen vehicle and the remaining loan balance. This gap arises when a vehicle depreciates faster than the loan is paid down. Credit unions typically offer GAP insurance at significantly lower cost than dealerships. It is most valuable when the down payment is small or the loan term is long.

Home Equity Line of Credit — a revolving line of credit secured by the equity in a borrower's home. HELOCs typically have variable interest rates tied to a benchmark (such as the Prime Rate) plus a margin. Borrowers can draw from the line as needed during the draw period (often 10 years) and repay during the repayment period. Credit unions often offer competitive HELOC rates compared to banks.

A fixed-rate, lump-sum loan secured by the equity in a borrower's home, also called a 'second mortgage.' Unlike a HELOC, a home equity loan has a fixed interest rate and a set repayment schedule. Home equity loans are used for large, one-time expenses — home improvements, debt consolidation, or major purchases. Credit unions frequently offer competitive home equity loan rates.

A liquidity metric calculated as Total Loans Outstanding ÷ Total Shares and Deposits × 100. It shows how much of member deposits have been deployed as loans. A ratio of 70–85% is generally considered healthy — sufficient lending to generate income while maintaining adequate liquidity. Ratios above 90% may indicate liquidity pressure; ratios below 50% may suggest the credit union is overly conservative.

Commercial and business loans made by credit unions to their member-business owners. Federal law caps MBL portfolios at federal credit unions at 12.25% of total assets (with exceptions for credit unions with demonstrated expertise or serving underserved areas). This cap does not apply to state-chartered credit unions in most states. MBL includes commercial real estate, business lines of credit, equipment loans, and SBA loans.

A federal law (MLA) that protects active-duty service members, their spouses, and dependents from predatory lending. The MLA caps the Military Annual Percentage Rate (MAPR) at 36% for covered loan products, prohibits mandatory arbitration clauses, and bars prepayment penalties on covered loans. The Department of Defense administers the MLA. Credit unions serving military communities must comply and may not extend covered credit at rates exceeding 36% MAPR.

A loan secured by real estate, used to finance the purchase or refinancing of a home. Credit unions offer conventional, FHA, VA, and jumbo mortgages. Many credit unions originate and service mortgages in-house, keeping the loan at the credit union rather than selling it to the secondary market. Credit union mortgage rates are often competitive with — and sometimes below — bank rates for members with equivalent credit profiles.

The National Credit Union Administration — an independent federal agency established by Congress in 1970. The NCUA charters and supervises federal credit unions, insures deposits through the National Credit Union Share Insurance Fund (NCUSIF), and oversees state-chartered credit unions that carry federal insurance. It is the credit union equivalent of the FDIC for banks.

The National Credit Union Share Insurance Fund — the federal insurance fund administered by the NCUA that protects member deposits at federally insured credit unions. Similar in structure and coverage to the FDIC's Deposit Insurance Fund for banks. Funded primarily by credit union deposits (each insured credit union must maintain a 1% deposit in the fund) and backed by a US Treasury line of credit.

The percentage of a credit union's total assets funded by its own capital (net worth), calculated as Net Worth ÷ Total Assets × 100. The NCUA requires federally insured credit unions to maintain a minimum net worth ratio of 6% to be classified as 'adequately capitalized' and 7% to be 'well capitalized.' Most healthy credit unions maintain ratios between 10% and 13%. A higher ratio indicates a larger financial cushion to absorb unexpected losses.

A service that covers transactions when a member's account lacks sufficient funds to pay them. Credit unions offer several forms: automatic transfer from savings (usually free or low-cost), a line of credit that activates to cover the shortfall (charged as a loan), or courtesy pay (the credit union pays the transaction and charges an NSF fee). Overdraft protection policies and fees vary by credit union.

A category used by the NCUA to group credit unions of similar asset size for comparative analysis. The NCUA typically divides credit unions into 9 or more peer groups by total assets (e.g., under $2M, $2M–$10M, $10M–$50M, etc.). Peer group comparisons help contextualize financial metrics — a net worth ratio of 9% means something different for a $10M credit union than for a $10B institution.

The estimated number of people who are eligible to join a credit union under its field of membership but have not yet done so. The NCUA requires credit unions to report the number of potential members on quarterly call reports. This metric helps assess a credit union's market penetration and growth opportunity. A large gap between potential members and actual members may indicate room for membership growth.

The NCUA's regulatory framework for intervening in credit unions with inadequate capital. PCA classifies credit unions into five categories based on their net worth ratio: Well Capitalized (7%+), Adequately Capitalized (6–7%), Undercapitalized (4–6%), Significantly Undercapitalized (3–4%), and Critically Undercapitalized (below 2%). As capital declines, mandatory corrective actions escalate in severity.

A Federal Reserve regulation implementing the Truth in Savings Act. Regulation DD requires depository institutions — including credit unions — to disclose standardized information about deposit account terms, fees, and annual percentage yields (APY). This allows consumers to compare accounts across institutions on a consistent basis. Credit unions must provide Regulation DD disclosures at account opening and when terms change.

A Federal Reserve regulation implementing the Truth in Lending Act (TILA). Regulation Z requires lenders — including credit unions — to disclose standardized credit terms, including the Annual Percentage Rate (APR), total finance charges, and total payment amounts. These disclosures must be provided before credit is extended and allow borrowers to compare loan costs across lenders.

A profitability metric calculated as Net Income ÷ Average Total Assets, expressed as a percentage. For credit unions, ROA measures how efficiently the institution generates surplus (net income) from its asset base. Industry average is approximately 0.70–0.90%. Negative ROA means the credit union is losing money and drawing down net worth. ROA above 1.0% is generally strong performance.

A checking account product offered by many credit unions that pays high dividend rates (often 3–6% APY) on balances up to a cap (typically $10,000–$25,000) when members meet monthly activity requirements. Typical requirements include a minimum number of debit card transactions (12–15 per month), enrollment in e-statements, and at least one direct deposit or ACH transaction. Balances above the cap earn a lower base rate. Rewards checking is a popular credit union product with few bank equivalents.

A federal law (SCRA) that provides financial and legal protections for active-duty military service members. Key provisions include: capping interest rates on pre-service debts at 6% APR during active duty, protections against foreclosure and repossession, and the right to terminate leases upon deployment orders. All lenders including credit unions must comply. Military credit unions often exceed minimum SCRA requirements with additional member benefits.

The credit union equivalent of bank savings accounts. 'Shares' represent a member's ownership stake in the cooperative. Every credit union member must maintain a minimum share balance (typically $5–$25) as proof of membership. Share accounts earn dividends (equivalent to interest at banks) and are insured by the NCUA up to $250,000 per member per ownership category.

The credit union equivalent of bank checking accounts. Share draft accounts allow members to write checks ('drafts'), use debit cards, set up direct deposit, and make electronic payments. The term 'draft' refers to the legal instrument used to draw funds. Share draft accounts may be non-interest-bearing or pay small dividends and are fully insured by the NCUA.

Deposit insurance provided by the NCUA's National Credit Union Share Insurance Fund (NCUSIF) for member deposits at federally insured credit unions. Coverage is up to $250,000 per member per account ownership category — the same limit as FDIC insurance at banks. The NCUSIF is backed by the full faith and credit of the US government. No member has ever lost insured funds in an NCUA-insured institution.

A cooperative network that allows credit union members to conduct transactions at partner credit union branches other than their own. The largest shared branching network is operated by CO-OP Financial Services with 5,600+ locations. At a shared branch, members can make deposits, withdrawals, loan payments, and balance inquiries. Shared branching gives members of small credit unions access to a national branch footprint.

A credit union chartered under the laws of a specific state rather than the federal government. State-chartered credit unions are supervised by their state's financial regulatory agency. Most also carry federal share insurance through the NCUA; a small number (primarily in a few states) carry state-authorized private share insurance instead. State-chartered credit unions may have different field of membership rules and lending authority than federal credit unions.

The total market value of all resources controlled by the credit union — including loans, investments, cash, and fixed assets. Total assets is the primary measure of a credit union's size and the basis for many key ratios (net worth ratio, return on assets, loan-to-share ratio). As of Q4 2025, the US credit union industry holds approximately $2.3 trillion in total assets across 4,374 institutions.

The accumulated retained surplus of a credit union — the portion of net income that has been retained in the credit union rather than paid out as dividends over the institution's history. Undivided earnings are the primary component of a credit union's net worth. Because credit unions cannot issue stock, they rely on retained earnings to build capital. A growing undivided earnings balance is a positive sign of financial health.

A mortgage loan program for eligible US veterans, active-duty service members, and surviving spouses, backed by the Department of Veterans Affairs. VA loans feature no down payment requirement, no private mortgage insurance (PMI), and competitive interest rates. Credit unions — particularly military credit unions like Navy Federal and PenFed — are major VA loan originators with extensive expertise in VA loan processing.

The highest capital category under the NCUA's Prompt Corrective Action framework. A credit union is 'well capitalized' when its net worth ratio is 7% or higher. Well-capitalized credit unions face no PCA-related operating restrictions and demonstrate the strongest financial resilience. Most financially healthy credit unions maintain net worth ratios well above this threshold (10–13% is common).