Credit Union

Quick Summary of Credit Union

A non-profit financial institution that is owned and operated entirely by its members. Credit unions provide financial services for their members, including savings and lending. Large organizations and companies may organize credit unions for their members and employees, respectively. To join a credit union, a person must ordinarily belong to a participating organization, such as a college alumni association or labor union. When a person deposits money in a credit union, he/she becomes a member of the union because the deposit is considered partial ownership in the credit union.

A credit union is a member-owned and controlled, financial cooperative that is entirely operated by and for its members. When an individual deposits money into a credit union, he/she becomes a member of the credit union and has partial ownership of that credit union. A credit union consists of individuals with a common affiliation, such as government employees, labour union members or residents of a particular community. Even a large organization or company can form a credit union for its employees, customers and partners. Most often a credit union will offer a full range of financial products and services including savings and lending. A credit union is closely regulated by the National Credit Union Administration and must operate in a very prudent manner like other financial institutions. Quite often, a credit union will be more competitive than a traditional bank or savings and loan institution because its non-profit status lowers its operating costs.

A credit union differs from a normal bank in that the members who have accounts in the credit union are its owners. (Mutual savings banks are owned by members.) Since a credit union is a co-operative institution, its policies governing interest rates and other matters are set to benefit the interests of the membership as a whole; for example, credit unions often pay higher interest on deposits and charge lower interest on loans. Credit union revenues (from loans and investments) do, however, need to exceed operating expenses and dividends (interest paid on deposits) in order to remain in business.

Credit unions offer many of the same financial services as banks, including share accounts (savings accounts), share draft (checking) accounts, and credit cards.

Regulatory agencies require that credit unions restrict their membership to defined segments of the population, such as employees of a certain company, a specific occupational group (teachers, doctors, etc.) or people who live in a well-defined geographic area. Mergers of smaller credit unions with disparate membership bases often result in a credit union with a wide variety of ways to qualify to join.

Canada is the country with the highest per capita use of credit unions, with over a third of the population enrolled in one. They are concentrated in Quebec, where they are known as caisse populaire, and on the western prairies. In the United States, they are most common in the western states (California, Washington, and Oregon).

Examples of Credit Union in a sentence

You may have to go to a credit union to try and secure a loan if all of the banks have turned you down.

He worked for a really good credit union and that made me happy, because he really tried hard to find a great job.

After John passed his probationary period at the health department, he became part of the municipal credit union for his banking needs so he could obtain a lower-interest home loan.

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