The Credit Union Difference
Credit Union History
Credit Unions were started in the 1800s
when farmers, who had been turned away
for loans by traditional banks, decided to
form their own “credit union.” The farmers
pooled their funds and made loans to each
other at reasonable rates, allowing them to
grow and prosper.
The Credit Union concept of “people helping people,” and the pooling of resources for the common good grew popular quickly. The movement took hold in Europe, then Canada, and finally came to America in the 1900s. Today, credit unions are largely full-service institutions offering many of the same services as banks and other financial institutions – including checking, savings, certificates and money market accounts and loans for vehicles, homes, debt consolidation and more.
Understanding what a Credit Union is remains unclear to some, so following is information on how Credit Unions differ from other financial institutions.
- Credit unions are not-for-profit financial cooperatives. This means that unlike other financial institutions that offer products and services in order to achieve profits for stockholders, credit unions exist simply to serve the financial needs of their Member-Owners. When credit unions realize earnings, they are returned to Members in the form of lower loan and higher savings rates, to offset fees and to expand service, such as adding branches and ATMs. That’s why credit unions are able to offer such tremendous value on products and services.
Credit Unions are not-for-profit.
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Credit Unions have Members and
Defined Fields of Membership
- Credit unions have "Members," who are consumers and small business owners who become Members by opening a "Share" savings account - in Redwood Credit Union's case, a simple $5 deposit in a savings account is required before Members become owners and have access to all other services. Additionally, Credit Unions are limited to serving those whom their state and/or federal regulator has approved them to serve in their "Field of Membership." Redwood Credit Union is a community Credit Union and can serve anyone living in 8 North Bay counties.
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Credit Unions have Volunteer Boards
and are owned by Members
- Credit unions have volunteer Boards of
Directors who are Members of the Credit
Union, and are elected by the Member-Owners.
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Credit Unions don't pay taxes on profits
- Because taxes are levied on profits and Credit Unions are not-for-profit organizations, income taxes are not assessed. Credit Unions do pay state sales, property and employment- related taxes.
- Like other financial institutions, credit unions today are largely full-service, which means they offer a wide array of financial services for consumers and small business owners.
Credit Unions are full-service financial
institutions
- Credit Unions are federally insured by
the US Government
- Most credit union deposit accounts, including IRA deposits, are Federally insured up to $250,000 by the National Credit Union Administration (NCUA)
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