More than 100 years ago, in a response to avoid being charged excessive costs on loans from lenders, the first laws were passed in Massachusetts recognizing the creation of member-owned credit unions. The idea caught on and served as a model for other states to pass similar laws, which helped grow the credit union movement across the country.
Owned by Members, Not Shareholders
Today, while banks receive the attention of the press, credit unions stand out as a bright spot amid the housing and credit crisis. As was the case back in 1909, credit unions have one major advantage over banks: they are owned by, and serve, their members. They are considered “not-for-profit” because they operate to serve the membership rather than to maximize profits.
How Credit Unions Work
The mission of credit unions is to return as much value to members as possible by generating a small profit (i.e. “surplus”). These earnings are returned to members in the form of more affordable loans, a higher return on savings, lower fees, or new products and services. This has been the outlook of credit unions for close to a century.
Credit Unions Across the Country
Today, nearly 8,300 credit unions collectively serve more than 90 million members in the United States. Credit unions continue to thrive because they are built on a history of people helping people and providing financial services to the communities they serve. It is these strengths — an engaged membership and strong ties to community — that will keep credit unions prosperous and vital for another 100 years.