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Credit Union)
A credit union is a co-operative financial institution that is owned and controlled by its members, generally through the election of a Board of Directors. Only a member of a credit union may deposit money with the credit union, or borrow money from it. The character of a borrower is often deemed to be the most important factor in deciding whether or not to make a loan.
A credit union differs from a normal bank in that the members who have accounts in the credit union are its owners. (Mutual savings banks are owned by members.) Since a credit union is a co-operative institution, its policies governing interest rates and other matters are set to benefit the interests of the membership as a whole; for example, credit unions often pay higher interest on deposits and charge lower interest on loans. Credit union revenues (from loans and investments) do, however, need to exceed operating expenses and dividends (interest paid on deposits) in order to remain in business.
Credit unions offer many of the same financial services as banks, including share accounts (savings accounts), share draft (checking) accounts, and credit cards.
Regulatory agencies require that credit unions restrict their membership to defined segments of the population, such as employees of a certain company, a specific occupational group (teachers, doctors, etc.) or people who live in a well-defined geographic area. Mergers of smaller credit unions with disparate membership bases often result in a credit union with a wide variety of ways to qualify to join.
Canada is the country with the highest per capita use of credit unions, with over a third of the population enrolled in one. They are concentrated in Quebec, where they are known as caisse populaire, and on the western prairies. In the United States, they are most common in the western states (California, Washington, and Oregon).
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