WHAT IS A CREDIT UNION?
Members are united by a common bond of association and democratically operate the credit union under state or federal regulation.

As of March 2008, there are more than 8,700 credit unions in the United States. About 548 of these are in California and 29 in Nevada. Of the more than 87 million credit union members nationwide, more than 9.9 million are in California and more than 470,000 are in Nevada.

Are Credit Unions Safe?
Like other financial institutions, credit unions are closely regulated. Historically, they have operated in a very prudent manner. The National Credit Union Share Insurance Fund (NCUSIF), administered by an agency of the federal government, insures deposits of 80 million credit union members at all federal and many state credit unions nationwide. Deposits up to $100,000 per account are insured. Likewise, deposits are insured for $100,000 or more in state-chartered credit unions covered by private insurance programs. Of the federal deposit insurance funds, the NCUSIF has had the strongest equity-to-insured risk ratio over the last decade. Not one penny of any insured savings has ever been lost by a member of a federally insured credit union.

What Are The Advantages Of Credit Unions?
Credit unions exist only to serve their member-owners. Surveys repeatedly show members are more satisfied with the service they receive from their credit union than customers of banks or savings and loans are with their institutions. Because credit unions are democratic, member-owned cooperatives, members have the power to direct credit union policy. If the majority of members are dissatisfied with the directors who set the policies of their credit union, they have the power to replace them. Credit union elections are based on a one-member, one-vote structure. This structure is in contrast to for-profit, public companies where stockholders vote according to the number of shares they own. Their nonprofit status enables credit unions to operate at a lower cost than many for-profit institutions and helps them to offer competitive loan and savings rates. For instance, credit unions usually charge lower interest on credit cards than most other providers, and many credit unions charge no annual card fee.

Can Anyone Join A Credit Union?
Members of each credit union must share a "common bond," such as the same workplace, church, fraternal organization, or neighborhood.

What Services Are Offered By Credit Unions?
Credit unions offer a large range of services, depending on the services a particular credit union's members demand. They can range from a "plain vanilla" credit union that only offers shares (deposits) and loans, to a full-service credit union that serves as its members' primary financial institution. Some credit unions also offer share certificates, financial planning, individual retirement accounts, mutual funds, auto loans, signature loans, home equity loans, home mortgage loans, small business loans, share drafts (checking accounts), credit cards, and ATM and debit cards.

What Makes Credit Unions Unique?
In credit unions, the members are the owners. They are treated like owners, and the benefits of ownership flow back to them, usually in the form of better rates on deposits or loans and better service. Regardless of their size or their field of membership, credit unions are different than for-profit financial institutions. Credit unions exist solely to serve their member-owners, who are the only depositors. Banks and other financial institutions exist to make money for their stockholders, not for their depositors.

IRnet — International Remittance Program
Credit union members/potential members can now use their credit unions to send money to family members in 36 different countries around the world and save on fees and exchange rates with the International Remittance Network (IRnet) program. In July 2000, the World Council of Credit Unions, Inc. (WOCCU) announced its expanded IRnet service and new partnership with VIGO (an international money transfer company) at the official opening of the East Los Angeles branch of the SCE Federal Credit Union. Through the combined efforts of the California Credit Union League, WOCCU, Arrowhead Credit Union, and SCE Federal Credit Union the program was successfully piloted in Mexico and has expanded to additional credit unions throughout the nation.

If you are interested in participating in this program or have questions, please contact Letty Cordon-Hernandez of the CU development department at the California Credit Union League. Letty can be reached at 800.472.1702, ext. 3224.

Visit the World Council of Credit Unions website at: http://www.woccu.org/

CREDIT UNION HISTORY
History of the Credit Union Movement

Credit Societies: 1852-1864
Two men, Hermann Schulze-Delitzsch and Friedrich Wilhelm Raiffeisen, were responsible for creating the first true credit unions in Germany in 1852 and 1864. During 1849, Raiffeisen founded a credit society in Flammersfeld, Germany, but it depended on the charity of wealthy men for its support. Raiffeisen remained committed to that concept until 1864, when he organized a new credit union along principles still fundamental today.

The credit societies in Germany, and similar institutions founded by Luigi Luzzatti in Italy, were the forerunners of the large cooperative "banks" that abound in Europe today. In 1871, credit union legislation was considered in Massachusetts. This attempt and later efforts in the 19th century to start U.S. credit unions were not very successful.

The Idea Goes West
It was a Canadian who transplanted the credit union to the Western Hemisphere. In 1900, Alphonse Desjardins organized a credit union (caisse populaire) in Levis, Quebec. The reasons were the same as those in Germany 50 years before. People were poor, interest rates were financially crippling, and the credit union offered a way out.

That first Canadian credit union was small by modern standards. The first savings deposit was only 10 cents; the first collection from all the members totaled only $26. Even today, in some countries, credit unions start small.

But Desjardins persevered and devoted a good part of his life to credit union development in North America. He founded other credit unions, including the first one in the United States, in 1909 in New Hampshire.

Jay, Filene — The U.S. Overture
Two Americans became profoundly influenced by Desjardins' efforts: Pierre Jay, the Massachusetts banking commissioner and Edward A. Filene, a Boston merchant.

Filene discovered credit unions in a village in India in 1907. He had stopped in Calcutta and met a government official who took Filene out into the countryside. There Filene first observed a village credit union in operation and was immediately interested. Back home again, he began reading about credit unions to strengthen his knowledge.

Filene was perhaps the ideal American to give the credit union idea a push. He was a progressive thinker for his time. He had begun profit-sharing plans for his employees, instituted other novel fringe benefit programs, was the founder of the "bargain basement" idea in department store operation, allowed his employees to engage in collective bargaining and arbitration,established minimum wages for female workers, and advocated a five-day, 40-hour week. In the early 1900s, such ideas were revolutionary. Besides his creative approach to business, Filene was also one of the founders of the U.S. Chamber of Commerce.

As banking commissioner, Pierre Jay had made a study of unauthorized banking practices in Massachusetts. He learned that several groups of employees in the commonwealth had started their own savings and loan organizations. These groups resembled what Henry Wolff, a European, had described as "people's banks." Jay believed that these small associations were providing a needed service, but he wanted to recommend a way to make them legal.

From Wolff's writings, Jay turned to the work of Desjardins and others. He began a chain of correspondence with Desjardins. This resulted in a 1908 conference in Boston in which Desjardins, Jay, Filene and other public-spirited citizens participated. Working with Desjardins, Jay prepared the legislation for what was to become the first general state credit union act in the United States.