In the United States, as elsewhere, credit unions were historically formed around a single church, place of work, labor union, or town. Membership was limited to those who were in the field of membership. The Federal Credit Union Act of 1934 limited membership to "groups having a common bond of occupation or association, or to groups within a well-defined neighborhood, community or rural district."[18] A 1982 federal regulation[which?] during Ronald Reagan's presidency allowed many credit unions to grow their memberships and expand into multiple states. Credit union membership reached 71 million members by 1997, more than double the number of members in 1991.[18] This expansion prompted banks to challenge the 1982 regulation as illegal, a challenge upheld in a 1998 U.S. Supreme Court decision, NCUA v. First National Bank & Trust[18][19] Within five months, both houses of Congress passed a bill signed by President Clinton to overturn the Court's decision.[20] Legally, and for tax purposes, credit unions in the US are considered to be non-profit organizations. Banks argue that this status exempts credit unions from many federal and state taxes, this gives credit unions a competitive advantage.[21] As of 2003, U.S. governmental regulatory agencies require that credit unions restrict their membership to defined segments of the population, such as people who live, work, worship, or attend school in a well-defined geographic area; employees of specific companies or trades; members of specific non-profit groups, including labor unions, alumni associations, conservation or other advocacy organizations, lodges, churches, or the like; or a particular occupational group, such as teachers, doctors, etc.[22] In the US this is referred to as a credit union's "field of membership", Internationally the term bond of association is used.

Credit unions may typically be chartered to serve a specific employee or associational group or groups (often called a Select Employee Group or "SEG Charter"), all members of a trade, industry, or profession (a "TIP Charter"), or have a "Community Charter" (typically a field of membership of anyone who lives, works, goes to school, or attends religious services in a particular city, county, or counties).[22] When a credit union converts to a Community Charter from a SEG Charter or TIP Charter, it can continue to serve its existing members as well as anyone who lives, works, worships, or attends school within its new geographical field of membership, but cannot admit new members from its former SEG(s) or TIP (unless the group in question is located within "the new community credit union's boundaries").[23] Similarly, a credit union that converts to a TIP or SEG charter from a different charter type can no longer admit new members from its old field of membership.[22] Typically, members' families – such as immediate family or household members – can also join the credit union.[22] In the United States, the National Credit Union Administration or a state regulator – depending upon whether or not the credit union is chartered by the federal government or by a state – decides whether or not to approve or deny proposed field of membership expansions or charter conversions to other credit union charters.[22] Mergers of smaller credit unions with disparate membership bases often result in a credit union with a wide variety of ways to qualify to join; thus, a credit union may have a much broader "field of membership" than that credit union's name would imply. Credit unions generally follow the principle of "once a member, always a member", which allows a member with a current credit union membership to remain a member even if s/he would otherwise no longer qualify to be such, such as leaving the company with whom s/he initially gained membership or moving outside the credit union's defined geographic area. However, many credit unions reserve the right of expulsion against a member who causes a financial loss.[24] Some credit unions also have expelled members, including elected Board and Supervisory Committee volunteers, for making whistleblower complaints against credit union managemen

Underserved and low-income areas

Federal credit unions may apply to the NCUA for Low-Income Credit Union or LICU status. To qualify for LICU status, the majority of the credit union's membership meet specific requirements in order to be considered "low-income". This LICU status allows the credit unions to benefit from certain NCUA programs to enhance its capacity to serve underserved populations who may otherwise lack access to credit or other financial services. In addition, some state regulators also provide for similar low-income designations.

Unlike banks, which were caught redlining underserved areas in the 1970s, credit unions are not subject to federal "community reinvestment" requirements, essentially because credit unions, by their nature and mission of "people helping people," already meet the financial needs of a broad spectrum of people that fall within their fields of membership, and play an active role in community development and growth.[citation needed] Credit unions, with the support of Republicans[20] have successfully lobbied to exempt themselves from the (U.S. federal) Community Reinvestment Act, the law that forces banks to provide services in low-income areas.

In 2006, U.S. credit unions approved 69% of mortgage applications they received from low- and moderate-income individuals, while other U.S. mortgage lenders approved only 47%, according to data collected in compliance with Home Mortgage Disclosure Act. The same data shows that U.S. credit unions approved 62% of minority members' mortgage applications, versus a 51% for other U.S. mortgage lenders.[28] That data also shows that 25.2% of all U.S. credit union mortgage originations were for low- or moderate-income borrowers, versus 20.6% at other U.S. mortgage lenders.[29] However, the NCUA has long discouraged U.S. credit unions from giving members loans that they may not be able to repay, and has forbidden other types of predatory lending and abusive credit practices.[30] Federal credit unions are also forbidden from charging prepayment penalties on loans. Credit unions are still trying to find ways to serve this market and offer loan products that benefit their memberships. Some are partnering with financial technology (FinTech) companies such as OnDeck and Think Finance that provide online loan origination and management software, freeing credit unions from having to build them from scratch.

Interest rates

United States credit unions typically pay higher dividend (interest) rates on shares (deposits) and charge lower interest on loans than banks.[32] Credit unions therefore often have a higher cost of assets (i.e. interest expense as a percentage of average assets) than commercial banks, with aggregate U.S. credit union cost of assets being higher than the aggregate U.S. bank cost of assets in eight of the thirteen years between 1995 and 2007.[33] Credit union revenues (from loans and investments) do, however, need to exceed operating expenses and dividends (interest paid on deposits) in order to maintain capital and solvency. A credit union's policies governing interest rates and other matters are set by a volunteer Board of Directors elected by and from the membership itself

How will businesses be affected?

Employers are going to have to keep the UK tax authority fully up-to-date with staff earnings through a computer system called real time information. This will be used to assess how much people are being paid, and so how much universal credit they are entitled to. Previously, an agency worker may have worked for fewer than 16 hours one week, and so been able to sign on. The following week they may work more than 16 hours and receive no jobseeker's allowance, then have to make a fresh claim if they fall below the 16 hours the week after that. Under universal credit, their benefit should be altered automatically as earnings go up and down - a change it is hoped will be beneficial.

Who are the other winners and losers?

In monetary terms, the government estimates 3.1 million households will be entitled to more benefits as a result of universal credit, while 2.8 million households will be entitled to less. Nobody will lose out during the initial transition assuming their circumstances stayed the same, the government says.

In its initial estimate of the new system, the Institute for Fiscal Studies said that the poorest are likely to do better, especially couples with children. However, the second earner in a family is likely to lose out in the long-term in many cases. Some charities argue that, because of a broad-brush approach that universal credit takes, those with more complex benefit claims may lose out, such as some people with disabilities who go to work. Those without a bank account, or who do not have internet access, will have to seek advice to prepare for the new way this benefit is run and paid.

Are there any other concerns?

ILabour says that it welcomes the principle behind the changes but it has raised concerns about the implementation of the scheme. Some unions have also spoken out, with the Unite union claiming it creates a division between a "deserving" and an "undeserving poor" - a division that it does not recognise.