What is a Credit Union?
You've probably seen a credit union while driving around town but wonder what we do. A credit union is a cooperative, nonprofit, member-owned financial institution. Unlike banks, which are owned by shareholders and must distribute profits to their owners, credit unions are owned by the members, who are also our customers. More than 122 million Americans are members of credit unions. We might be smaller than the big banks - but we're mighty!
Credit unions also offer many of the same products and services as banks. However, different names are often used for our accounts and features, such as "primary share" instead of "checking account."
The bottom line is that credit unions are intended to serve as a safe place for people to save and borrow at reasonable rates. Because of our nonprofit status and community-oriented mission, credit unions often offer surprising benefits to our members.
Seven Cooperative Principles for Credit Unions
Credit unions are financial cooperatives and, like cooperatives around the world, they generally operate according to the same seven core principles and values adopted in 1995 by the International Cooperative Alliance. Cooperatives can trace their roots to the first modern cooperative founded in Rochdale, England, in 1844.
The Seven Cooperative Principles are a set of fundamental values and philosophies that guide credit unions and cooperatives in equality, fairness, and mutual self-help.
VOLUNTARY AND OPEN MEMBERSHIP
Co-operatives are voluntary organizations, open to all persons able to use their services and are willing to accept the responsibilities of membership, without gender, social, racial, political or religious discrimination.
DEMOCRATIC MEMBER CONTROL
Co-operatives are democratic organizations controlled by their members, who actively participate in setting their policies and making decisions. Men and women serving as elected representatives are accountable to the membership. In primary co-operatives members have equal voting rights (one member, one vote) and co-operatives at other levels are also organized in a democratic manner.
MEMBER ECONOMIC PARTICIPATION
Members contribute equitably to, and democratically control, the capital of their co-operative. At least part of that capital is usually the common property of the co-operative. Members usually receive limited compensation, if any, on capital subscribed as a condition of membership. Members allocate surpluses for any or all of the following purposes: developing their co-operative, possibly by setting up reserves, part of which at least would be indivisible; benefiting members in proportion to their transactions with the co-operative; and supporting other activities approved by the membership.
AUTONOMY AND INDEPENDENCE
Co-operatives are autonomous, self-help organizations controlled by their members. If they enter into agreements with other organizations, including governments, or raise capital from external sources, they do so on terms that ensure democratic control by their members and maintain their co-operative autonomy.
EDUCATION, TRAINING AND INFORMATION
Co-operatives provide education and training for their members, elected representatives, managers, and employees so they can contribute effectively to the development of their co-operatives. They inform the general public - particularly young people and opinion leaders - about the nature and benefits of co-operation.
CO-OPERATION AMONG CO-OPERATIVES
Co-operatives serve their members most effectively and strengthen the co-operative movement by working together through local, national, regional and international structures.
CONCERN FOR COMMUNITY
Co-operatives work for the sustainable development of their communities through policies approved by their members.
Credit Unions vs. Banks
Credit unions have an overall mission of improving the financial well-being of their members and serving their communities. There are several important credit union benefits you can expect if you join a credit union.
Better Rates on Loans and Savings Accounts
Credit unions are focused on providing reasonable rates to their members. Because we don’t have to pay profits to shareholders as banks do, credit unions often can pass that money directly on to our members, by offering higher APYs on savings accounts and CDs and lower APRs on loans.
Great Customer Service
Credit unions tend to rate more highly than banks on surveys of customer satisfaction. At PrimeTrust, routinely 96% of credit union members were “highly satisfied” with their credit union experience. Because our customers are also our owners, we tend to be highly focused on providing customer service in a way that not every bank may match. We are here for you, at whatever stage of life you're at.
Support for Small Businesses
Credit unions tend to provide loans for the smallest businesses that might be overlooked or underserved by larger banks. If you are a small business owner or just want to support small businesses in your community, being a credit union member may help. We are committed to the success of small businesses in Delaware County - no matter if they're a startup or a large enterprise.
Nearly 50% of credit unions have a specific mission to serve low-income communities. No matter what kind of neighborhood, city or town people live in, credit unions intend to connect their local community with affordable financial services. Credit unions help our members save $12.6 billion per year by offering lower fees and higher returns on deposit accounts, as well as $5.6 billion of savings on auto loans.
Credit unions can make a big difference in the financial lives of people who might otherwise be charged high fees or pay higher interest rates on the car loans they need to just get to work.
Support for Diversity and Inclusion
Perhaps because credit unions are so community oriented, with local relationships in communities that might otherwise be underserved by traditional banks, credit unions have a strong focus on support for diversity and inclusion.
Compared to banks, credit unions have more than 10 times as many women serving as CEOs. Credit unions are also more likely than banks to be Minority Depository Institutions (MDIs); there are more than three times as many credit union MDIs as bank MDIs.
Many companies talk about how much they care about diversity and inclusion. Credit unions make it part of their everyday work by providing for the financial needs of diverse communities.