October 29, 2016

The value of credit unions

Yes Magazine - The fundamental difference between credit unions and banks is that credit unions are cooperatives, owned and controlled by members—their account holders. They exist to serve the needs of their membership, and because credit union members are eligible to vote—or run—for the board of directors, they have a direct role in shaping how the organization operates. Unlike banks and other financial institutions, credit unions are not-for-profits, exempt? from certain taxes, and required to use excess earnings to benefit members.

The first credit union in North America was established in 1901 in Quebec, by Alphonse Desjardin, a reporter who founded the Caisse Populaire after learning of a Montrealer who was ordered to pay nearly $5,000 interest on a $150 loan. Immigrants from Quebec to New Hampshire brought the model to the States when they founded La Caisse Populaire, Ste-Marie (now St. Mary’s Bank) in 1908. Both of these early credit unions had strong ties to Catholic parishes—indeed, most early credit unions were formed around specific groups associated with a workplace, trade, or faith.

One hundred years later, credit unions are experiencing a surge in popularity, as people resist paying exorbitant fees to the very megabanks that were at the center of the 2008 economic meltdown. According to the National Credit Union Administration, credit unions in the United States added nearly 2.1 million new members in 2012, bringing total membership to a record 93.9 million.

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