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Credit Union Field of Membership Requirements

One of the issues giving some people pause as they consider joining a credit union is the fact that you have to meet certain requirements in order to join. These requirements are known as Field of Membership (FOM) qualifications. If you do not fall within the credit union’s accepted membership field, you can’t join. This can be a sticking point for many, who want to take advantage of some of the competitive yields offered by credit unions. Many credit unions also offer good interest rates on loans. It can be frustrating to try and take advantage of these perks, only to be told you do not meet the FOM requirements.

Why Credit Unions Have FOM Requirements

It seems a little strange that credit unions would be exclusionary. However, the reason that credit unions have FOM requirements has to do with the status that credit unions are accorded. Credit unions are considered to be cooperatives. Credit union boards of directors are elected by members, and members put money into “share” accounts. In practice, though, many credit unions seem a lot like banks. However, legally, and for tax purposes, credit unions are different from banks. They are looked upon as non-profits, and this status means that they are exempt from many federal and state taxes. Banks assert that this exemption means that credit unions can offer more competitive products, since they are not being taxed the way banks are. (This has long been a sticking point with banks, especially in recent years, as FOM requirements have widened.)

Originally, credit unions were designed to cater to the folks that many banks did not want to be bothered with. For a long time, banks were somewhat reluctant to welcome those with lower incomes. By forming a credit union, it was possible for members to help those with common bonds and causes obtain needed credit and other financial services. The Federal Credit Union Act was signed in 1934, before the Great Depression became a memory. Indeed, the Great Depression was still very much a reality at that time, and many people were looking for a way to band together and get the financial services they needed.

You have to prove your identity when you open an account, and banks can decide who is eligible to be a customer based on your identity. However, credit unions are required to comply with FOM requirements. This means that banks have a larger pool of potential customers to choose from, since they do not have to deny anyone based on certain traits.

However, in some cases it is possible for credit unions to broaden their FOM requirements so that more people can join.

The Evolution of FOM Requirements

Initially, credit unions were fairly limited in scope. Credit union membership might be limited to people in a specific geographic location, or limited to those with a certain employer. University credit unions sprung up to serve students and alumni. This is because once you are a member of the credit union, you do not have to maintain your affiliation to stay a member. So, if your credit union membership is based on where you live, you can still remain a member of the institution even after you move away.

It is also worth noting that, in many cases, if a member of your family is part of a credit union, you can be, too. Parents can help their children set up accounts, and siblings can invite each other to join. So, even if you don’t fall into a credit union’s field of membership, you can still get the benefits if a close family member is involved at the credit union.

Credit unions quickly realized that they could get more members with broader FOM requirements. Efforts have been made over the years to legally increase the number of members than a credit union can attract. And it has been working. One of the most common methods now is to allow members of the same organization to join. You can join a specific organization and be eligible for credit union membership. This ability, plus the way that technology has made banking accessible in ways not seen before, has made some credit unions truly national – something unforeseen back in 1934.

One of the first credit unions to do this was the Pentagon Federal Credit Union. PenFed decided that any member of the National Military Family Association could join. So, for those who did not work for the Department of Defense, there was an option. And membership in the National Military Family Association is open to anyone who can pay $20. Other credit unions have similar policies. If you have a few dollars, you can join an association and then join the credit union. In many cases, even if you let the association membership lapse, you can still stay on as a member of the credit union.

However, these more inclusive FOM requirements are not standard at all credit unions. While some credit unions are interested in broadening their FOM requirements, others are content to remain rather exclusive. Some credit unions have rather restrictive FOM requirements. Some of these include a requirement to join an association – that is itself rather exclusive. The Self Reliance New York FCU is a good example. In order to join this credit union, you have to join an association, Selfreliance Association of American Ukrainians. However, not just anyone can join this association. The association itself is very stringent in accepting only those who were born in the Ukraine, or at least whose parents were born there.

Bottom line: Many people like credit unions because they often (but not always) provide access to competitive products and services. If you are set on joining a credit union, chances are that you can find one with FOM requirements that will accept you. You might be able to join an association in order to qualify, or you might already qualify to join a credit union in your local area.

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Previous Comments
  |     |   Comment #1
Good topic; I recall that there were already some threads on this same topic. 

Many CUs have strict FOMs that rule out most folks FCU (Erie GE FCU is just one of the examples).  There were a few that are "too open" and cause problems with the very definition of CUs (e.g., AAFCU).

There are potentially some CUs that are somewhat hidden but open with a minimum amount of donation to some assciation or local clubs.  These ones remain hidden to the public so that they can offer competitive/beneficial products over the long term.  It is up to the individuals to find out these hidden gems; if you know what I mean:-)
  |     |   Comment #2
As the Police and Fire Federal Credit Union episode of early Summer 2010 showed, posting methods of easy access to such "gems" on depositaccounts.com can cause the credit union to shut down that avenue if membership applications spike dramatically.
  |     |   Comment #3
In Southern California, several credit unions have an expanded "community FOM" which includes those who work, worship or live in certain Cities, County or defined geographic areas.  This is by far the most open CU FOM requirement.


An alternative FOM is when a CU failure/merger occurs, then the surviving CU requirements are expanded to include their own FOM and also the prior merger CU FOM requirements.  Also, don't forget many CU's also now allow in their FOM-roommates, domestic partners and nannies who live as part of a current member's household.  


OC Steve
  |     |   Comment #4
Yes, a good topic;  but poorly written.

It seems a little strange that Miranda still posts here. However, the reason that Miranda still posts here has to do with...?
  |     |   Comment #6
Give her a break, guys:-)

Remember this is a friendly and encouraging forum, let's keep it that way.

Thanks, Miranda!
  |     |   Comment #7
I gave her a break a month ago with that ridiculous "8 Safe Places to Keep Your Money" post.  There has been little improvement since then.
  |     |   Comment #8




  |     |   Comment #9
#8, take your banking lobby drivel somewhere else.
Keaw Bannork
  |     |   Comment #10
Is form "Field of Membership" going to be approved or accepted to everyone? is there a chance after to paid for this form but you still not get approved?
Joe Cipriani
  |     |   Comment #11
If a credit union has an expanded FOM which involves joining some otherwise obscure organization, shouldn't that path to membership be made public?  There are credit unions who hide a path to membership.  Security by obscurity???

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