What is a credit union?

what is a credit unions

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:

  1. Credit Unions are not-for-profit, other financial institutions are owned by outside stakeholders.
  2. Credit Unions are owned by members, other financial institutions are owned by outside stakeholders.
  3. 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.

Source: autoexpertsocal.wordpress.com

Category: Credit

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