Credit Union

St Lucia Co-operative Credit Union League Ltd. > What is a Credit Union

What is a Credit Union?

A Credit Union is a co-operative financial institution, within which the membership possesses full ownership and control. Credit unions serve groups of persons who share a common bond, such as place of residence, nature of employment, religious denomination and the like. Credit unions are also not-for-profit organizations and exist to provide members with a safe, convenient and advantageous means of saving and obtaining other financial services at reasonable rates.

This member-owned, cooperative financial institution provides many of the same financial services as other financial institutions, which includes but is not limited to saving and youth and senior accounts, loans for a variety of purposes, insurance, and even convenient services to access and send funds.

While for-profit institutions operate to maximize profit for distribution amongst their shareholders, credit-unions operate at cost to provide a service to their members and earnings in excess of operational costs are redistributed amongst it’s members. This is done by way of allotment to its members in the form of increased interest on savings, improved return on shares, decreased rates on loans or other new and improved services which serve to secure general wellbeing of its membership.

Credit Union Advantages

Surveys conducted worldwide repeatedly confirm that members of credit unions are more satisfied with the service they receive from their credit union than are their counterparts who are customers of banks
The foregoing is owing to the fact that credit unions are democratic, member-owned cooperatives, whose members have the power to direct credit union policy. For instance, if the majority of members are dissatisfied with the directors who set the policy of their credit union, they have the power to demand replacement.
Credit union elections are based on a one-member, one-vote structure. This structure is in contrast to for-profit, public companies where a stockholder’s voting power is according to the number of shares they own.
Credit unions are uniquely different from for-profit financial institutions and offer their members special advantages.

Credit Union Difference

Credit unions are uniquely different from for-profit financial institutions and offer their members special advantages:

Member Ownership

Each member of a credit union is an equal owner of that credit union and is entitled to one vote at the annual meeting, regardless of the amount of money he or she has deposited in the credit union.

Members First

Because credit unions are not-for-profit cooperatives, they are usually able to offer considerably lower loan rates, higher interest on savings and lower fees than for-profit institutions.

Volunteer Leadership

Credit Unions are led by a Board of Directors, elected by the membership at the annual meeting. Board members volunteer and are not compensated.

Differences between a Co-operative
and other Businesses

Co-operative

Nature: Organized People

Purpose: To serve members at cost

Method: Each member has only one vote
Capital is paid minimun interest
Surplus is divided among members in proportion to patronage

Ordinary Business

Nature: Organized Capital

Purpose: To serve public for profit

Method: Each share of stock has only one vote
Capital receives all the profit
Profit is paid to stockholder in proportion to their holdings