What is the primary purpose of a credit union's limited membership?

The primary purpose of a credit union's limited membership is to create a more cooperative environment for its members. Credit unions operate on the principle of serving their members rather than maximizing profits like traditional banks. By limiting membership to specific groups—such as employees of a certain company, residents of a particular area, or members of an association—credit unions can foster a sense of community and shared interest among their members. This structure encourages collaboration and support among members, which is central to the cooperative model that credit unions embody.

In this cooperative framework, members are often more engaged and invested in the institution, which can lead to better services and support for each other, further enhancing the overall member experience. This contrasts with the pursuit of broader profit motives seen in other financial institutions, which may prioritize expansion or increased executive compensation over member welfare.