Facts about credit unions

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Credit unions lack profit motive: The establishment and ownership of credit unions are solely vested on the people they serve not a few shareholders who control the activities of the union. The unions are not founded on the premise of making profits but serve the members.

Flexible and easily achievable eligibility to join the unions: The requirements to join a particular credit union are relatively reasonable and easily achievable by new members. They include specifications such as residence in a particular community or belonging to a certain profession.

Credit unions are usually insured. This is usually a protective measure against certain risks such as inflation or other economic crises all aimed at protecting the interests of the members and safety of their money. The feature of insurance usually serves as an attraction for new members as the risks of losing their savings are eliminated.

Credit unions lend out money to the members at relatively low-interest rates: This is founded on the principle that the members borrow from a common pool of their own finances. The risks involved in credit facilities and responsible for high-interest rates are inexistent in the case of credit unions.

Non-members of the unions also benefit from the existence of these institutions: This is facilitated by the low-interest rates offered in these credit unions and thus banks are compelled to lower their rates so as to remain viable.

Democratic control of the credit unions by the members: The credit union members have the eligibility to attend and participate in particular union meetings. During voting times, each member is entitled to an equal one vote.

Election of leaders: the members of a credit union usually take part in the election of their officials who run the errands of the union and are liable for any inefficiency arising from the activities of the union.

Continuous/ perpetual savings: The credit unions give an opportunity to the members to continue saving their money to perpetuity. Once a person is a member of accrediting union, there is no coercion to leave the union except at one’s own discretion.

Minimum share account. All members of a credit union are always required to maintain or reach a certain level of savings balance in order to access loans from the union. This measure is fundamental in securing the borrowed amounts.

Interest on account balances: The money held in accounts is usually earning a predetermined interest. This assures the members of guaranteed growth o their money.

Just like any other entity, credit unions are separate legal entities with rights and obligations different from those of the members.

Finally, the existence of credit unions has also been impacted by the advent of globalization and the technologies of the 21st centuries. Currently, credit unions have stepped up their operations to brace the new technologies such as the issuance of credit and debit cards, internet/ online access to accounts and mobile banking. Members can remit their contributions without necessarily travelling to the offices of the unions.

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