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Encyclopedia > Credit unions

A credit union is a co-operative financial institution that is owned, controlled and administered by its members. Only a member of a credit union may deposit money with the credit union, or borrow money from it. The character of a borrower is often deemed to be the most important security for his/her loan.

A credit union differs from a bank in that it typically may pay higher interest on deposits, may charge lower interest on loans, and the members who have accounts in the credit union are its owners. Credit unions offer many of the same services as a bank, including share accounts (savings accounts), share draft (checking) accounts, and credit cards.

Since a credit union is a co-operative institution, its policies governing interest rates and other matters are set to reflect the interests of the membership as a whole.

Generally, credit unions are required to restrict their membership to a certain segment of the population, such as employees of a certain company, a specific occupational group (many credit unions have educators as their core group), or people who live in a certain well-defined area.

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.

See also

External links

  • National Credit Union Administration (http://www.ncua.gov) which licenses and insures deposits at US credit unions.
  • credit unions in Canada (http://www.fin.gc.ca/toce/2003/ccu_e.html)
  • lists of all credit unions in the U.S. by state (http://www.bankrate.com/brm/news/cu/19990526b.asp)
  • http://www.abcul.org the Association of British Credit Unions, the largest national body for British Credit Unions

  Results from FactBites:
Fool.com: Fool Banking, Are Credit Unions Foolish? (954 words)
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.
  More results at FactBites »



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