Once a Member, Always a Member: Expulsion, Mergers, and Limits

Under federal law, once a member always a member is the rule for credit unions: Section 1759(e)(2) of the Federal Credit Union Act says that once you join in accordance with the law, you remain a member until you choose to withdraw or are expelled.¹ Retiring from the employer that qualified you, letting a professional association lapse, or moving across the country does not end the relationship. The initial qualifying event is a one-time gate, not an ongoing requirement. Lifetime status comes with real limits, though, and there are a handful of ways to lose it.

What the Rule Actually Protects

Credit unions are cooperatives. When you open an account, you buy at least one share and become a partial owner rather than a customer. To join, you have to fall within the credit union’s “field of membership,” which is usually based on where you work, where you live, or an association you belong to.² The Federal Credit Union Act recognizes three charter types: single common bond (one employer or association), multiple common bond (several groups), and community charters open to everyone in a defined geographic area.

Section 1759(e)(2) is the retention rule people shorthand as “once a member, always a member.” It protects the status, not the circumstances that got you there. Your qualifying tie can disappear entirely and you still count as a member.

Membership Does Not Mean Every Service Stays Available

This is the part most people miss. The NCUA’s own Chartering and Field of Membership Manual says the retention rule “does not prevent a credit union from restricting services to members who are no longer within the field of membership.”² A credit union could, for example, stop approving new loans from members who no longer live in its community charter area while still letting them keep existing savings and checking accounts.

Most credit unions choose not to do this for longtime members who have simply moved. But they have the legal authority. If you’re planning a major move and rely on your credit union for lending, ask directly before you assume nothing will change.

Keeping Your Membership Active

The only ongoing financial requirement is maintaining a par value share, which is the minimum ownership deposit your credit union requires. Under the Federal Credit Union Bylaws, a member who withdraws all shareholdings ceases to be a member.³ Each credit union sets its own par value. Five dollars is a common figure, though some set it higher.⁴

The practical takeaway: never withdraw your last few dollars from your share savings account unless you intend to end the relationship. If fees or small withdrawals push your balance below par value, you’ll typically get a notice to restore it. Failing to do so within the credit union’s timeframe ends the membership.³ Once that happens, you have to re-qualify under the current field of membership to rejoin. If you no longer meet those criteria, you may be out.

Long stretches of inactivity carry a related risk. Every state has unclaimed property laws that require financial institutions to turn over funds from dormant accounts to the state after a set period, commonly three to five years. If your credit union cannot reach you and your account shows no activity for years, the balance, including your par value share, can be escheated. Once that share is gone, so is the membership. Keeping even minimal activity on the account, such as logging in online or making a small deposit annually, resets the dormancy clock.

How a Credit Union Can End Your Membership

Lifetime status is the default, not an absolute. Federal law gives credit unions two separate paths to involuntary termination, and one of them was significantly expanded in 2022.

Expulsion for Cause

The Credit Union Governance Modernization Act, enacted in March 2022 as part of Public Law 117-103, gave credit union boards direct authority to expel members for cause by a two-thirds vote of a quorum of directors.⁵ Before this change, expelling a member for cause generally required assembling the full membership for a vote at a special meeting, a process so cumbersome that most credit unions never used it.⁶

Under the NCUA’s final implementing rule, “cause” means one of three things. The first is a substantial or repeated violation of the membership agreement, which typically includes causing a financial loss to the credit union. The second is dangerous or abusive behavior, including violence, threats, harassment, or verbal abuse directed at employees, officials, or other members. The third is fraud, attempted fraud, or other illegal activity for which you’ve been convicted in connection with the credit union.⁶

Expulsion for Nonparticipation

Separately, a credit union’s board can adopt a policy to expel members who simply don’t participate in the institution’s affairs. The statute lists examples: failing to vote in elections, never purchasing shares beyond the minimum, and never taking out or making a loan. Before enforcing any such policy, the credit union must mail written notice to every member at least 30 days before the effective date, and new members must be told about the policy when they apply.⁵

Your Rights if You Are Facing Expulsion

The 2022 law and the NCUA’s implementing rule build in meaningful protections. A credit union cannot simply close your account without warning.

You have to receive written notice before any expulsion. That notice must include enough factual detail for you to understand the specific grounds; vague or conclusory statements are not enough. It must also explain your right to request a hearing and how to do so, describe what happens to your accounts, and tell you that you can file a complaint with the NCUA’s Consumer Assistance Center if you cannot resolve the dispute directly.⁷

From the date you receive the notice, you have 60 calendar days to request a hearing before the board of directors.⁵ If you request one, the board must provide it. You can present your case orally, typically by videoconference (or by phone if videoconference isn’t feasible), or submit a written response instead. At the hearing, the board cannot raise any justification that was not included in the original written notice. If you do nothing during the 60-day window, the expulsion takes effect automatically.⁷

There is no formal internal appeal beyond the board hearing. Expelled members must, however, be given an opportunity to request reinstatement, and the credit union is required to hold at least one board vote on a first reinstatement request. Beyond that, your recourse is a complaint to the NCUA or a private lawsuit.⁷

Expulsion does not wipe out what you owe or what the credit union owes you. The bylaws require the credit union to pay out all your shares, minus any amounts you owe the institution.⁷ If you have an outstanding auto loan or credit card balance, the credit union can demand immediate repayment after expulsion, subject to contract terms that may say otherwise. The NCUA deliberately left the question of calling in loans to state contract law and each credit union’s discretion rather than imposing a uniform federal rule. Your expulsion notice should include a line-by-line accounting of any deductions the credit union plans to make and a timeline for when you’ll receive remaining funds.

What Happens When Your Credit Union Merges

Credit union mergers happen regularly, and they’re one of the situations where the “once a member, always a member” principle gets tested in practice. If your credit union merges into another, you automatically become a member of the surviving institution. Federal regulations require that you receive shares in the continuing credit union equal to whatever you held in the original one.⁸ The continuing credit union also assumes all liabilities of the merging institution, so existing loans carry over on their current terms.

You get a say in the process. A merger proposal must be approved by a majority of members who vote, and at least 20 percent of eligible members must participate. The vote is conducted by secret ballot and administered by an independent entity with experience in corporate elections.⁹

The wrinkle is field of membership. If the surviving credit union has a different charter type or geographic boundary, some former members may land outside the new field. Membership itself is protected, but, as with any out-of-field situation, the continuing credit union could restrict certain services going forward.

Passing Eligibility to Family and Household Members

One of the most valuable features of lifetime status is that it creates eligibility for your relatives. The Federal Credit Union Act limits derivative membership to immediate family members and people in your household.¹ Under the NCUA’s standard bylaws, “immediate family member” includes your spouse, children, siblings, parents, grandparents, grandchildren, stepparents, stepchildren, stepsiblings, and adoptive relationships. A “household member” is anyone living in your residence and sharing a single economic unit.¹⁰

Qualifying relatives can join even if they have no independent connection to the credit union’s field of membership. An NCUA legal opinion clarifies that the family member doesn’t even need you to be an active member; they only need you to be within the credit union’s field of membership at the time they apply.¹¹ Once they join, their membership is independently protected by the same retention rule. Even if you later close your own account, their membership survives, and as independent members they can extend eligibility to their own immediate family and household members in turn.

1
Office of the Law Revision Counsel. 12 USC 1759 Membership
2
eCFR. Appendix B to Part 701 – Chartering and Field of Membership Manual
3
eCFR. 12 CFR Part 701 – Organization and Operation of Federal Credit Unions – Appendix A Federal Credit Union Bylaws
4
National Credit Union Administration. Membership Rights and Par Value of Shares
5
GovInfo. 12 USC 1764 Expulsion and Withdrawal
6
Federal Register. Federal Credit Union Bylaws
7
National Credit Union Administration. Federal Credit Union Bylaws Final Rule
8
eCFR. 12 CFR 708b.304 – Merger of a Federally Insured Credit Union
9
eCFR. 12 CFR 708a.306 – Membership Approval of a Proposal to Merge
10
National Credit Union Administration. Appendix A to Part 701 – Federal Credit Union Bylaws
11
National Credit Union Administration. Membership Eligibility of Immediate Family Members