|
Membership
American
Banks
Cooperatives
History
uk
| |
CU
A credit union is a cooperative financial institution that is owned and
controlled by its members. Credit unions differ from banks and other financial
institutions in that the members who have accounts in the credit union are the
owners of the credit union.
Credit union policies governing interest rates and other matters are set by a
volunteer Board of Directors elected by and from the membership itself. Only a
member of a credit union may deposit money with the credit union, or borrow
money from it. As such, credit unions have historically marketed themselves as
providing superior member service and being committed to helping members improve
their financial health.
Credit unions may be viewed as non-profit organizations, or alternatively as
for-profit enterprises charged with making a profit for their members (who
receive any profits earned by the cooperative in the form of dividends paid on
savings, which are taxed as ordinary income, or reduced interest rates on
loans). This debate reflects credit unions' unusual organizational structure,
which attempts to solve the principal-agent problem by ensuring the owners and
the users of the institution are the same people. In any case, credit unions
generally cannot accept donations and must be able to prosper in a competitive
market economy.
Credit unions typically pay higher dividend (interest) rates on shares
(deposits) and charge lower interest on loans than banks.. Credit union revenues
(from loans and investments) do, however, need to exceed operating expenses and
dividends (interest paid on deposits) in order to maintain capital and solvency.
Credit unions offer many of the same financial services as banks, including
share accounts (savings accounts), share draft (checking) accounts, credit
cards, and share term certificates (certificates of deposit) and online banking.
Credit unions exist in a wide range of sizes, ranging from volunteer operations
with a handful of members to institutions with several billion dollars in assets
and hundreds of thousands of members.
| |
|
