Credit unions originated in Western Europe in the mid-nineteenth century to provide access to affordable credit. People found that by pooling their resources, they could loan funds to each other at reasonable rates. The interest paid on loans helped to reward the savers for their contributions. Thus was born the concept of a not-for-profit financial cooperative serving a group of people united by a common bond.

The idea spread to Canada in 1900, and to the US in 1909. Today there are approximately 10,000 credit unions nationwide that are federally regulated and federally insured by the National Credit Union Administration, a US Government Agency.

Unlike banks, which are in business to earn a profit for their stockholders from their depositors and borrowers, credit unions are in business to provide service for their members. Membership eligibility may be occupational, geographic, or through an association, depending on the credit union's charter. (MHV's community charter allows us to serve anyone who lives, works, worships volunteers or attends school — and businesses and other legal entities — in Ulster, Orange and Dutchess Counties, NY.) By investing in a share account, each eligible credit union member becomes a shareholder and co-owner of the financial cooperative, strengthening the bond that unites the organization.

Because credit unions focus on service, not profits, savings rates are generally a little higher, loan rates a little lower, and fees fewer than those found at profit-making institutions.

You’ll also find a difference in the structure of credit unions vs banks. At a credit union, the Board of Directors that establishes corporate policy is elected by the membership from among the membership, and they serve without pay, in the spirit of volunteerism. They in turn hire a professional staff to serve the members and oversee the day to day operations.

For further information on credit unions, visit the web site of the
Credit Union National Association at www.CUNA.org.