*It is a non-profit financial
institution that is owned and
operated entirely by its members
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
join a credit union, a person must ordinarily
belong to a participating organization
* Credit unions are normally taxed at rates lower than
other financial institutions.
unions generally operate under government
charter and supervision.
are particularly important in less developed
unions provide financial services for their
members, including savings and lending
* The practice of banking is ancient; for almost as long as
people have had money.
Credit unions date to the 1900s, when they were initially
established as workers cooperatives. In the 20th century,
several industries began creating their own credit unions,
allowing members of specific industries or employees of
particular businesses to enjoy credit union membership.
banks, credit unions are financial
membership organizations. You don't open an account
at a credit union.
* Unlike banks, credit unions are non-profit
organizations. Their profits are distributed right back
to their members. Because of this, credit unions
often charge lower fees than banks and pay higher
interest rates on savings accounts, money market
accounts, interest checking accounts and certificates
* The board of directors at a credit union is classically
elected or comprised of volunteers, and members all
participate in elections and major financial decisions.
By contrast, a bank is owned by a private company,
with a board appointed by the company or
shareholders in the company.
* Banks are far bigger so they offer a lot more services,
while credit unions are generally far smaller than the
banks so there usually have far fewer services be
in a credit union used to be very
restrictive and only available to people who worked
for particular employers.
credit unions have virtually no membership
requirements other than a quick online application.
For example, the Melrose Credit Union has an open
charter in New York State and has members from all
over the U.S. and the world.
credit union’s customers are its members.
Credit unions can only offer services to
members. This is because credit unions are cooperatives – self-help organizations owned and
democratically controlled by their members.
*Promoting responsible lending
* Banking services
* Savings accounts
* Affordable loans
* Financial education and access to money advice
* Insurance products
* The rules
*Credit unions objectives
* Promoting thrift – members must be encouraged to save as well
credit and loan products with fair and reasonable
efficient use and control of members’ savings for mutual
benefit in order to earn rate of return (the dividend).
members to use money wisely devise a budget and
manage their financial affairs.
* Members own and control their credit unions.
*Distribution of profits
*Credit unions distribute their profits to members
in dividends which mean the money stays in the
community rather than going to faceless
shareholders. They are also committed to
improving the economic and social well-being of
*The Credit Union Tax Exemption
cooperative depository institutions were
generally exempted from the federal corporate income
1951 Congress removed the thrift tax exemption
because these institutions had evolved into commercial
bank competitors, and had lost their “mutuality.
Credit Union Characteristics
* First, credit unions are member-owned, and each member is
entitled to one vote in selecting board members and in
certain other decisions.
Second, credit unions do not issue capital stock. Credit
unions create capital, or net worth, by retaining earnings.
* Third, credit unions rely on volunteer, unpaid boards of
directors whom the members elect from the ranks of
* Fourth, credit unions operate as not-for-profit institutions,
in contrast to shareholder-owned depository institutions.
* Fifth, credit unions may only accept as members those
individuals identified in a credit union’s articulated field of
membership. Generally, a field of membership may consist of
a single group of individuals that share a common bond.
*Credit Unions Microfinance Services to
Today credit unions exist and strive in every region of
the world. In Asia credit unions have more challenging
role is the home of most of the poor people in the
How credit unions demonstrated they can provide
microfinance services to the poor and low-income
communities in sustainable way?
By three ways:
* A. Union is a union Credit of people with a goal of
improving their living standards through access of
affordable financial services.
* B. Can take advantage of social capital in situations
where financial capital is scarce.
* C. Self and Mutual Help
How the credit union help members
improve their lives?
* Assist members achieve their financial goals
* Assist members develop financial discipline-family
budgeting. Save first before spending
* Provides loan for productive purpose to create selfemployment
* Built in a support for entrepreneurship.
* It is focused on the long-term well-being
How much importance credit unions
placed on its sustainability to continually
serve the community?
* Success Key Indicators
* Financial viability
* Operational Efficiency
* Competitive position
* Member satisfaction
* Employee satisfaction
unions generally have fewer branches and
offer fewer services than banks and they have
fewer ATMs, only about 60 percent of credit unions
offer ATM cards.
* Access to new technology is limited. Credit unions
often do not have the funds to invest in
technology. As a result, some credit unions'
websites appear as if they belong in a bygone era.
unions are often focused on a certain
community, most often either a geographic
location or a profession. This has created the
impression that it can be difficult to find a union
for which you qualify. For example, Pentagon
Federal Credit Union is generally only available to
those who are U.S. government employees and a
few other select groups, but anyone else can also
qualify with a $15 donation to an organization.