Credit unions are financial institutions formed by an organized group of people with a common bond. Members of credit unions pool their assets to provide loans and other financial service to each other, known as a cooperative. Credit unions are not-for-profit, providing opportunities to offer lower loan rates, higher savings rates and lower service fees. In addition, credit unions are not publically owned, they are member-owned and their board of directors are non-paid volunteers.
- History of Credit Unions:
From their origins, credit unions were unique depository institutions credited for not-for-profit, but to serve members as credit cooperatives. The earliest financial cooperatives date back to the beginning of the 19th century in England. In the mid-1800’s, Germany was the first home of credit unions as we know them today:
Democratically governed, each member has one vote, member-elected board of directors, and volunteer based. For more information about the history of credit unions, visit NCUA.gov .
- The Credit Union Difference
Credit unions are different from other banks in several ways:
- Credit Unions are not-for-profit, other financial institutions are owned by outside stakeholders.
- Credit Unions are owned by members, other financial institutions are owned by outside stakeholders.
- Credit Unions are operated by mostly volunteer boards, other financial institutions are controlled by paid boards.
Credit unions are very service-driven, rather than sales driven. They meet the member needs by the services and products they offer. Credit unions also have a concern for their local communities and the membership they serve.