- Credit unions are not-for-profit financial cooperatives organized by groups of people with a common relationship, such as common employment, religious affiliation, community or industry. Credit unions exist to serve members' needs, rather than benefit shareholders like a bank. Owned and operated by members who pool assets to provide loans and other financial services to other members, credit unions are chartered by the National Credit Union Administration (NCUA), a federal agency set up to supervise federal credit unions and insure credit union funds through the National Credit Union Share Insurance Fund (NCUSIF).
- According to the Credit Union National Association (CUNA), in 1844 weavers in Rochdale, England established the Rochdale Society of Equitable Pioneers. Selling shares to members to raise capital enabled them to purchase goods below retail, then resell the goods at savings to members. By 1850, the concept spread to Germany, by 1901 to Canada, and by 1908 reached Manchester, New Hampshire. There, a church-affiliated membership---St. Mary's Cooperative Credit Association---established the first U.S. credit union.
- For most credit unions, the primary goal is helping members save money. Credit unions function at the pleasure of the members, rather than shareholders, so earnings and profits return to the members as improved services, lower interest rates on loans, higher interest earnings on savings and lower service fees. In 1935, credit unions developed the saying "not for profit, not for charity, but for service." CUNA lists this saying as the foundation of today's credit union philosophy of "cooperation, equality, equity and mutual self-help."
- Seven principles, inspired by and named for the original Rochdale cooperative, support the credit union philosophy: voluntary membership; democratic member control; members' economic participation; autonomy and independence; education, training and information; cooperation among cooperatives; and concern for community. Membership, while defined and voluntary, is open to anyone irrespective of gender, social status, race, political views or religious affiliation.
- Banks have shareholders; shareholders want dividends regardless of the depositor's needs or desires. Credit unions have members; members want benefits and become depositors to provide and utilize those benefits. Most credit unions operate by volunteer boards from among their membership, and board positions are open to any member choosing to run.
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