thumb|A branch of the Coastal Federal Credit Union in Raleigh, North Carolina

A credit union is a member-owned nonprofit cooperative financial institution. They may offer financial services equivalent to those of commercial banks, such as share accounts (savings accounts), share draft accounts (cheque accounts), credit cards, credit, share term certificates (certificates of deposit), and online banking. Normally, only a member of a credit union may deposit or borrow money. In several African countries, a credit union is commonly referred to as a SACCO ("savings and credit co-operative").

Worldwide, credit union systems vary significantly in their total assets and average institution asset size, ranging from volunteer operations with a handful of members to institutions with hundreds of thousands of members and assets worth billions of US dollars.

In 2006, 23.6% of mortgages from commercial banks were subprime lending, compared to only 3.6% of those from credit unions, and banks were two and a half times more likely to fail during the crisis. American credit unions more than doubled lending to small businesses between 2008 and 2016, from $30 billion to $60 billion, while lending to small businesses overall during the same period declined by around $100 billion. In the US, public trust in credit unions stands at 60%, compared to 30% for big banks. Furthermore, small businesses are 80% more likely to be satisfied by a credit union than with a big bank.

"Natural-person credit unions" (also called "retail credit unions" or "consumer credit unions") serve individuals, as distinguished from "corporate credit unions", which serve other credit unions.

Differences from other financial institutions

thumb|Statue in Rača, Bratislava of Samuel Jurkovič, founder of the first cooperative, or credit union, in Central Europe (Spolok Gazdovský)

Credit unions differ from banks and other financial institutions in that those who have accounts in the credit union are its members and owners,

Not-for-profit status

In the credit union context, "not-for-profit" must be distinguished from a charity.

History

thumb|[[Friedrich Wilhelm Raiffeisen founded the first rural credit unions in Germany.]]

thumb|A [[Desjardins Group|caisse populaire credit union in Lévis, Quebec, ]]

"Spolok Gazdovský" (The Association of Administrators or The Association of Farmers), founded in 1845 by Samuel Jurkovič, was the first cooperative financial institution in Europe. The cooperative provided a cheap loan from funds generated by regular savings for members of the cooperative. Members of the cooperative had to commit to a moral life and had to plant two trees in a public place every year. Despite the short duration of its existence, until 1851, it thus formed the basis of the cooperative movement in Slovakia. Slovak national thinker Ľudovít Štúr said about the association: "We would very much like such excellent constitutions to be established throughout our region. They would help to rescue people from evil and misery. A beautiful, great idea, a beautiful excellent constitution!"

Modern credit union history dates from 1852, when Franz Hermann Schulze-Delitzsch consolidated the learning from two pilot projects, one in Eilenburg and the other in Delitzsch in the Kingdom of Saxony into what are generally recognized as the first credit unions in the world. He went on to develop a highly successful urban credit union system. America's Credit Union Museum now occupies the location of the home from which St. Mary's Bank Credit Union first operated. In November 1910 the Woman's Educational and Industrial Union set up the Industrial Credit Union, modeled on the Desjardins credit unions it was the first non-faith-based community credit union serving all people in the greater Boston area. The oldest statewide credit union in the United States was established in 1913. The St. Mary's Bank Credit Union serves any resident of the Commonwealth of Massachusetts. Federal credit unions, such as the UNI Financial Cooperation caisse in New Brunswick, are incorporated under federal charters and are members of the Canada Deposit Insurance Corporation.

In the United Kingdom, credit unions are covered by the Financial Services Compensation Scheme in the same manner as banks and building societies (co-operative banks) are, and deposits are protected up to an amount of £85,000 per consumer and institution.

See also

  • Bond of association
  • Consumers' cooperative
  • Cooperative banking
  • Capital market
  • Community federal credit union
  • Deposit account
  • Democratic member control (cooperatives)
  • History of credit unions
  • Humanomics
  • Labour Bank
  • Credit unions in Canada
  • Credit unions in the United Kingdom
  • Credit unions in the United States

References

Further reading

  • Ian MacPherson. Hands Around the Globe: A History of the International Credit Union Movement and the Role and Development of the World Council of Credit Unions, Inc. Horsdal & Schubart Publishers Ltd, 1999.
  • F.W. Raiffeisen. The Credit Unions. Trans. by Konrad Engelmann. The Raiffeisen Printing and Publishing Company, Neuwid on the Rhine, Germany, 1970.
  • Fountain, Wendell. The Credit Union World. AuthorHouse, Bloomington, Indiana, 2007.
  • Credit Union National Association – national trade association for credit unions
  • World Council of Credit Unions – global trade association for credit unions
  • Association of Asian Confederations of Credit Unions – regional federation representing 21 national federations in Asia with 35 million retail members
  • National Credit Union Service Organization – directory of all credit unions in the U.S.
  • National Credit Union Foundation – charitable arm of credit union industry