A credit union is a co-operative, not-for-profit financial institution organized to promote savings and provide credit to members. It is member-owned and controlled through a Board of Directors elected by the membership. The Board serves on a volunteer basis and establishes policies, sets dividend and loan rates, and directs certain operations. The result: members are provided with a safe, convenient place to save and borrow at reasonable rates at an institution which exists to benefit them, not to make a profit for stockholders.
Most financial institutions are owned by stockholders, who own a part of the institution and intend on making money from their investment. A credit union doesn’t operate this way. Rather, each credit union member owns one “share” of the organization. The user of credit union services is also an owner, and is even entitled to vote on important issues, such as the election of member representatives to serve on the Board of Directors.
The first credit union co-operatives started in Germany over a century ago. Today, credit unions are found everywhere in the world. The credit union movement started in this country in Manchester, New Hampshire. There, the St. Mary’s Co-operative Credit Association, a church-affiliated credit union, opened its doors in 1909. Today, one in every three Americans is a credit union member.
The primary purpose is to encourage members to save money. Another purpose is to offer loans to members. In fact, credit unions have traditionally provided a source for loans to people of modest means. Credit unions can charge lower rates for loans (as well as pay higher dividends on savings) because they are non-profit co-operatives. Rather than paying profits to stockholders, credit unions return earnings to members in the form of dividends, lower loan rates or improved services. Today, most credit unions offer a full range of financial services. To see the services offered by New Horizons, click on Products & Services.