Those same members collectively own and control their credit unions. Every member gets an equal vote on the election of board of directors at their credit union, Regardless of their deposits. Like banks, credit unions operate for the benefit of their shareholders. But unlike banks, a credit union’s shareholders are the members and vice versa — they’re both members and owners.
Credit unions aren’t a new idea. The first one popped up in Germany in the late 1800s. The first American credit union opened in 1909. In 1934, the Federal Credit Union Act was signed into law, authorizing credit unions in every state. To this day, Oct. 20 is celebrated as International Credit Union Day. But despite the worldwide appeal, credit unions are decidedly local institutions.
Most credit unions operate in a specific geographic area and that’s the same source for their members. For example, Gather Federal Credit Union operates branches across Kaua‘i. It offers membership to anyone who lives, works, worships, attends school or operates a business on Kaua‘i or Ni‘ihau. Members’ immediate families are all eligible as well. In that sense, credit unions work to strengthen communities by helping to build financial security for all members.
Credit unions are nonprofit organizations and members benefit from similar protections as banks. Credit unions generally offer products and services similar to what banks offer, as well, including checking and savings accounts, loans, ATMs, debit and credit cards, IRA shares and certificates, money transfers and online banking. Some credit unions may also offer financial planning and counseling services. Members’ credit union accounts are federally insured by the National Credit Union Administration up to $250,000. Members also typically benefit from lower fees, competitive loan rates, higher dividend rates on deposit accounts and a more personal approach to member service.
There’s lots more to learn about credit unions. A great place to start is at www.MyCreditUnion.gov.
But, more than anything, the most important thing to remember about credit unions is their shared philosophy: “People Helping People.”