According to the Credit Union National Association (CUNA) , a credit union "is a cooperative financial institution, owned and controlled by the people who use its services". These people are members. Credit unions serve groups that share something in common, such as where they work, live, or go to church. Credit unions are not-for-profit, and exist to provide a safe, convenient place for members to save money and to get loans at reasonable rates. Essentially, credit unions are collectives of people brought together to loan each other money at fair rates.
The members/depositors/owners are all one and the same. Credit unions are run not-for-profit, and thus are able to deliver substantially higher rates than banks for the same deposits.
Because credit unions exist to serve their members best rather than to make the
biggest profit, the service at a credit union is generally considered superior
to that given by banks. Credit unions are known for providing better financial
guidance and better financial education to their members than banks are to their
customers. The employees of a credit union have their fellow members' interests
at heart, and most credit union members love the personalized service they receive.
Learn more about The Credit Union Difference.
Credit unions were started in the 1850s by Herman Schulze-Delitzch and Friedrich Raiffeisen in Germany. In 1850, Schulze-Delitzch organized the first cooperative credit society known as the "people's bank". Friedrich Raiffeisen formed the Heddesory Credit Union in 1864 in an effort to help German farmers pay for livestock, equipment, seeds and other farming needs.
The first credit union in North America was formed in 1900 by Alphonse Desjardins in Quebec, Canada. Desjardins noticed the exorbitant interest rates that the working class paid to loan sharks. In response, he opened St. Mary's Cooperative Credit Association in Manchester, New Hampshire. This was the first credit union in the United States of America.
Credit unions grew slowly in the 1900s until 1934 when President Franklin Roosevelt signed the Federal Credit Union Act into law, authorizing the opening of federally-charted credit unions. Not until 1970 though, was an organization created to charter and oversee federal credit unions. The National Credit Union Administration (NCUA) is governed by a three-member board appointed by the President and confirmed by the U.S. Senate. It also operates the National Credit Union Share Insurance Fund (NCUSIF) to insure the savings of the members in all federal credit unions as well as many state-chartered organizations.
More and more people join credit unions everyday. Today there are more than 9,000 credit unions with over $600 billion in assets. Credit Unions rate high consistently in customer satisfaction in a number of financial institution surveys.