Chapter 11 Business and Consumer Loans

Credit unions are not new. The first credit union in the U.S. was founded in Manchester, New Hampshire in 1909. Today, over 12,000 credit unions with $4316 billion in assets serve 70 million people in the United States.

There are several types of credit unions. For instance, a community development credit union serves primarily low-income customers in financially distressed areas. A corporate credit union does not serve individuals, but rather, acts as a credit union for other credit unions. Most credit unions are established to support people in a specific community, employees of specific companies, or members of an organization or association.

York Tracktown Credit Union (YTCU), a non-profit financial service, was established in 1954. YTCU's members hold control of the credit union. They vote for the Board of Directors which is made up of YTCU members. YTCU is insured up to $100,000 per member by the National Credit Union Administration. Sponsoring companies include manufacturers, distributors, and service providers in and around the York, PA area. A complete list of sponsor companies can be found at www.ytcu.com/sponsors.html.

York Tracktown Credit Union offers residents of south central Pennsylvania a broad scope of products and services. The YTCU offers a variety of low-cost, competitive accounts such as savings accounts, certificates of deposit (CDs), individual retirement accounts (IRAs) and club accounts. YTCU also offers no-fee, no-minimum-balance checking accounts, as well as debit cards and payroll deductions.

All this information and more can be found at www.ytcu.com.

Problem:

Preparation:

In preparation for this problem, complete the following:

• Read the preceding information about York Tracktown Credit Union and on the company's Web site
• Identify important facts regarding credit unions

1. If a company is interested in offering credit union membership to its employees as a benefit, there are certain requirements that must be met. Name five requirements a company must meet in order to offer YTCU membership to its employees.

2. Use the information found at www.ncua.gov/about/what.html to prepare a short summary of what a credit union is. Consider the following in your answer:
   1. The funding for a credit union
   2. Eligibility for membership
   3. Credit union motto

3. Using the information found at www.ncua.gov/about/history.html, give a short summary of the history of credit unions. Areas to consider:
   1. The home of the first credit union
   2. The organizers of the first credit union

4. Chapter 11 of your textbook covers business and consumers loans. The term loan is used because it conveys the message that the borrowed money should be repaid along with any interest that has accrued. If a loan is not paid back according to the terms of the signed agreement, this information may be turned over to a credit agency. The credit agency keeps a record of the information. Many lenders and employers use this information to make decisions. An individual with a "bad credit history" may be turned down on further loans, or even be turned down on a job. Go to www.consumerlaw.org/consumer/credrepa.html, and answer the following:
   1. Define a credit report.
   2. According to the information given at the Web site, is it true that bad credit can be erased? Explain your answer.
   3. There are three major credit-reporting agencies. What are they?
   4. Who can see your credit report and what information is usually listed on it?

Include the date in your answers.

© Copyright 2000 Addison Wesley Longman, Inc.