On the third Thursday of October, credit unions around the world celebrate International Credit Union Day. The day honors the contributions credit unions have made to society and gives credit union members a chance to reflect on the credit union movement, its history and achievements, and how membership in a credit union makes each member part of something special.
Since 1948, credit unions have been empowering their members and helping them build their wealth through outstanding service, favorable interest rates on loans, lower maintenance fees on accounts and higher dividends on savings.
This year, the theme of ICU Day is One World Through Cooperative Finance. “At a time in our history when we seem increasingly divided,” says The World Council of Credit Unions,” we hope your credit unions use the 76th anniversary of ICU Day to show how our movement brings people closer together through democratic, member-owned financial institutions that put people over profit.”
What is International Credit Union Day and why is it observed?
Credit unions are financial institutions, but they’re also part of a progressive social movement designed to help everyday people gain control over their finances. While traditional banks keep large chunks of their earnings as profits for shareholders or trustees, credit unions try to make only enough money to keep the institution going, redistributing profits back to their members in the form of lower interest rates on loans and higher interest rates on savings.
The credit union movement began in 1852, when Franz Hermann Schulze-Delitzsch founded the first credit union in what is now called Switzerland. He was hoping to find a way to alleviate the problems of a recent drought and resulting famine, but banks were unwilling to extend loans to farmers that were behind on their payments.
Founding a “people’s bank,” Schulze-Delitzsch extended loans to those who needed them, bridging the gap between the drought and prosperity in the region. By 1864, credit unions had spread to Germany, and by the end of the 19th century, the movement had reached urban centers throughout Europe. The idea of a banking system for the people spread quickly, which isn’t surprising when you consider that a message built around the idea of letting members control their own money is as sensible as it is exciting.
By the early 20th century, credit unions had reached North America, where they took off almost immediately. The idea was introduced by Alphonse Desjardins, who was stirred to action by the story of a local citizen who had been ordered by a court to pay $5,000 Canadian Dollars (CAD) in interest on a loan of $150 CAD.
During the 20th century, credit unions exploded in size and variety. Today there are about 82,000 credit unions in 98 countries, spanning six continents and serving more than 403 million individuals and businesses.
Four Factors That Make Credit Unions Stand Out
In the spirit of ICU Day, let’s take a quick look at four factors that make credit unions a great choice.
1. Members first
As a member of a credit union, you own a piece of the organization. That’s why it’s often referred to as a cooperative. Your credit union is not betrothed to Wall Street—credit unions only want what’s best for you. This means they can focus on offering superior service and policies that are as member-friendly as possible.
2. Lower fees
Banks earn much of their profit through fees and pushing unnecessary product on their customers. While a credit union will also have fees attached to products and services, these tend to be lower than similar fees you’ll find at a bank.
3. They have your back
A credit union will be willing to work with you through rough patches. While a bank is more likely to turn down a borrower who has a poor credit history, a credit union employee will work hard to find a loan that best suits your needs. They often have programs to help you learn the basics of budgeting and how to get out of debt.
4. Better dividend rates
Credit unions typically offer higher dividend rates on savings accounts and lower interest rates on loans. They only need to cover operating costs, and all the money saved is passed down to members in the form of favorable rates, enhanced services, increased operations and more.
Banks vs. Credit Unions
Are You Eligible to Become a Member of a Credit Union?
Most credit unions limit membership based on employment with a specific organization, affiliation or based on geographic area. Check with the credit union you’re interested in joining today to see if you may be eligible for membership.
There’s no wrong way to celebrate International Credit Union Day. Learn more about ways to celebrate the day at the World Council of Credit Unions.
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