What Credit Unions Are and Why People Love Them

So here’s a fun fact, which also happens to be the reason I’m writing this blog: International Credit Union (ICU) Day comes every year on the third Thursday of October (October 18 in 2018). It’s a big day for credit unions and this year (2018), the theme is “Find Your Platinum Lining.” If you’re wondering why they’re messing with your silver lining, they have a good reason. This is the platinum (70^th) anniversary of ICU day, which started in 1948 and has been celebrated on the third Thursday of October since then.

SO WAIT. WHAT IS A CREDIT UNION?

A credit union is very much like a bank. It offers the same types of products and services that a bank offers, like savings and checking accounts, loans, IRAs, CDs, money market accounts, you name it. And they are federally insured (by NCUA—the National Credit Union Association).

One of the main differences between a bank and a credit union is that a bank has customers and a credit union has members. In fact, members can accurately be described as member-OWNERS of the credit union because they actually own a share of the financial cooperative, which is what a credit union is at its core.

Cooperatives have been around since 1844 and the first credit union was started in 1862 in Germany, to allow farmers to become interdependent, thereby saving them from having to mortgage their property in order to purchase cattle. It began as an “association” and grew rapidly to become a “credit society,” from which farmers could borrow money at a lower rate. By borrowing at a lower rate from others in their local industry, the farmers were able to support each other in building their business and their wealth.

As a member-owner, you have the power to get involved in leading the credit union by volunteering as a member of the Board of Directors. Directors are traditionally elected by the membership annually and must go through an application, selection, and voting process. Once in office, they have the power to provide direction and exert control over the affairs of the credit union, and provide direction for the CEO.

Credit unions run on a “people helping people” philosophy and they are founded on seven cooperative principles, which I won’t make you hunt for. Here they are:

1. Voluntary membership
2. Democratic member control
3. Member economic participation
4. Autonomy and independence
5. Financial education, training, and information
6. Cooperation among cooperatives
7. Concern for the community

If you want to read about them more in-depth, click here.

These principles ensure that credit unions remain true to their members, facilitating the growth of their overall membership the economic health of their communities.

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About Heidi White

Heidi White is a content writer with eight years of experience in the credit union industry. She is passionate about creating timely and useful content that inspires people to take daily, conscious steps toward more joyful lives. Heidi lives in Barre, Vermont.

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