Credit union (CU) is a cooperative banking association operated exclusively for the benefit of its members. The members pool their saving and borrow money at a rate of interest sometimes lower than the interest charged by most banks. C.Us are organized among the employees of companies or members of farm groups, labor unions, and educational, religious and social institutions. In 2007, there were about 45,000 credit unions in the United States of America with a membership of about 87 million. The unions had assets of more than $ 85 billion. Deposits in credit unions are insured up to $ 250,000 per account by the federal government.
Cooperative credit societies originated in Germany during the 1840's.Alphonse Desjardins organized the first credit union in North America in 1900 in Levis, Quebec. Desjardins helped set up the first credit union in the United States in Manchester, NH, in 1908. In 1909, Massachusetts became the first state to legalize credit unions. Desjardins helped draft the new law. Boston merchant Edward A. Filene became a leader in the development of American credit unions. Today, more than half of all credit unions in the United State operate under federal charters and are supervised by the National Credit Union Administration. The others are chartered by individual states.
A CU is much like a bank. Having an account in a CU is a very good idea. A CU provides pretty much the same interest rates on savings and current accounts, but a substantially lower rate on loans and mortgages. Naturally, a lower rate of interest means savings for you, but there are other unseen benefits to this. For example, a lower rate means easier payments. Easier payments mean you pay them on time. Paying on time and not defaulting on your loan go a long way in improving your credit score.
Your credit score is a very important number. For those who know how to read it, it tells them a lot about your financial life and your lifestyle. Employers have taken to checking credit scores laately before hiring because it gives them an idea of the kind of person you are and your trustworthiness. If you are an entrepreneur or a small business using a CU will help improve and expand your business with the easy availability of credit. This will also improve your overall standing in the market place. By sure not to use a CU exclusively because banks are not every friendly towards C.Us and may create problems for your business.
C.Us are also charitable organizations and are active in improving the neighborhood that they are based in. the CU support schools and education schemes. Working with a CU will display a philanthropic side of company. Also there is the satisfaction that your hard earned money is going to fatten up some bank executive. Opening an account in a CU is much easier now-a-days. If you are a business you might have to pay a small membership fee. If you are a student you could secure a loan from a School CU at group discount rates.