What is a Credit Union?

A credit union is a cooperative financial institution, owned and controlled by the members who use its services. Credit unions serve groups that share a common bond, such as where they work, live or go to church. Credit unions are also not-for-profit and exist to provide a safe, convenient place for members to save money and to get loans and other financial services at reasonable rates.

In credit unions, the members are the owners. Benefits of ownership include better rates on deposits and loans and better service. Regardless of their size or field of membership, credit unions are different than for-profit financial institutions. Credit unions exist to serve their members. Banks and other financial institutions exist to make money for their stockholders.

Credit unions are member-owned, cooperative financial institutions that provide many of the same financial services that banks do, savings and checking accounts, youth and senior accounts, loans for a variety of purposes, insurance, convenient services to access and send funds and more. In essence they are mutual organizations operated entirely by and for their members.

While for-profit institutions must make profits for their shareholders, in a credit union any earnings in excess of operational costs are returned to the members in the form of increased interest on savings, decreased rates on loans or other new and improved services.

The Credit Union Difference

Credit unions are uniquely different from for-profit financial institutions and offer their members special advantages:

- Member Ownership

Each member of a credit union is an equal owner of that credit union and is entitled to one vote at the annual meeting, regardless of how much money he or she has deposited in the credit union.

- Members First

Because credit unions are not-for-profit cooperatives, they are usually able to offer lower loan rates, higher savings rates and lower fees than for-profit institutions.

- Volunteer Leadership

Credit unions are led by a board of directors elected from the membership at the annual meeting. Board members volunteer and are not compensated.

Credit Union Advantages

Across countries, surveys repeatedly show that members are more satisfied with the service they receive from their credit union than customers of banks.Because credit unions are democratic, member-owned cooperatives, and members have the power to direct the credit union policy. If the majority of members are dissatisfied with the directors who set the policies of their credit union, they have the power to replace them. Credit union elections are based on a one-member, one-vote structure. This structure is in contrast to for-profit, public companies where stockholders vote according to the number of shares they own.

Credit Unions Worldwide

Credit unions are part of an international system encompassing 92 countries around the world, there are 42,616 credit unions, enabling 157 million members to grow and gain access to affordable financial services. Local, national and regional organizations are affiliated to the world's leading credit union development agency and international association for credit unions--World Council of Credit Unions, Inc. To learn more about the various credit union movements, visit the International Credit Union System section of this website.