How does a credit union get started?

Question

I have a agroup of men with wives 12000 who would like to have creedit union

Answer 1

A credit union is a not-for-profit co-operative financial institution that is owned and controlled by its members, through the election of a volunteer Board of Directors elected from the membership itself. Only a member of a credit union may deposit money with the credit union, or borrow money from it.

A credit union differs from a traditional financial institution (banks, savings and loan, etc.) in that the members who have accounts in the credit union are the credit union's owners. A credit union is a co-operative institution, with policies governing interest rates and other matters set to benefit the interests of the membership as a whole. As such, credit unions have historically marketed themselves as providing superior member service and being committed to helping members improve their financial health. Credit unions typically pay higher dividend (interest) rates on shares (deposits) and charge lower interest on loans than banks.[1]. Credit union revenues (from loans and investments) do, however, need to exceed operating expenses and dividends (interest paid on deposits) in order to maintain capital and solvency. The lowered profitability of most credit unions relative to banks is indicative of credit unions' focus on serving members, whereas banks must be concerned with maximizing profits in order to enhance stock performance.

Credit unions offer many of the same financial services as banks, including share accounts (savings accounts), share draft (checking) accounts, credit cards, and share term certificates (certificates of deposit) and home banking.

The for-profit banking industry has a conflicted relationship with credit unions. Bank trade associations are opposed to the tax-free structure on earnings that credit unions enjoy and the American Bankers Association has identified the revocation of credit unions' tax-free status as topping its political agenda in 2004 and 2005. However, bank holding companies and their affiliates aggressively compete to provide services to credit unions through their ATM networks, corporate checking accounts, and Certificate of Deposit programs.

Contents [hide]

1 Membership restrictions

2 Credit Union Leagues and Associations

3 Corporate credit unions

4 History

5 North American statistics

6 See also

7 External links



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Membership restrictions

Governmental regulatory agencies require that credit unions restrict their membership to defined segments of the population, such as people who live, work, worship, or attend school in a well-defined geographic area; employees of specific companies or trades; members of specific non-profit groups (alumni associations, conservation or other advocacy organizations, lodges, churches, or the like); or a particular occupational group (teachers, doctors, etc.) In the U.S., this is referred to as a credit union's "field of membership." In the U.K. it is referred to as the "Common Bond."

Mergers of smaller credit unions with disparate membership bases often result in a credit union with a wide variety of ways to qualify to join; thus, a credit union may have a much broader field of membership than that credit union's name would imply.

Credit unions generally follow the principle of "once a member, always a member," which allows current credit union membership to continue even if the individual would no longer qualify to be a member (such as changing professions or moving outside the area). However, if the member closes his/her account, the member may or may not be eligible to rejoin, depending on the credit union's policies and government regulations.

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Credit Union Leagues and Associations

Credit unions in the United States have traditionally employed a state/national trade association relationship that aligns credit unions with state “Credit Union Leagues” followed by national affiliation with the Credit Union National Association (CUNA) of Madison, Wisconsin. Federal credit unions may also be members of the National Association of Federal Credit Unions (NAFCU).

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Corporate credit unions

The majority of credit unions serve consumers. "Corporate" credit unions (also known as "Central Credit Unions") also exist, but instead serve the needs of credit unions with operational support, funds clearing tasks as well as product and service delivery - in effect, they serve as the credit union's credit union. The largest Corporate Credit Union in the United States is U.S. Central Credit Union of Lenexa, Kansas, which serves as a central clearing house for corporate credit unions. The largest corporate credit union that serves only natural-person credit unions is Western Corporate Credit Union (WesCorp) in San Dimas, California.

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History

Credit union history dates back to Europe in 1844. In the United States, Edward Filene, a Bostonian merchant, was instrumental in establishing enabling legislation in Massachusetts in 1908.

St. Mary's Bank Credit Union holds the distinction as the first credit union established in the United States and is based in Manchester, NH. St. Mary's was founded by French-speaking immigrants to Manchester from the Maritime Provinces of Canada in 1908.

Filene also created the Credit Union National Extension Bureau, the forerunner of the Credit Union National Association, which was formed as a confederation of state leagues at a meeting in Estes Park, Colorado in 1934. Attendees at the meeting included Dora Maxwell who would go on to help establish hundreds of credit unions and programs for the poor in her lifetime and Louise Herring, whose work to form credit unions and ensure their safe operation earned the title of “Mother of Credit Unions” in the United States.

In the same year, Congress passed the Federal Credit Union Act, which permitted credit unions to be organized anywhere in the United States. The legislation allowed credit unions to incorporate under either state or federal law, a system of dual chartering that persists today.

Early credit unions were viewed as the “poor man’s bank” because they would extend credit to people who otherwise would not qualify for credit. However, today, credit unions are no longer lacking in prestige and are used widely, for example, among university employees and large telecommunications corporations.

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North American statistics



Credit unions are called caisses populaire in French speaking communities of Canada. This one is located in Shediac, New Brunswick.Canada is the country with the highest per capita use of credit unions, with over a third of the population enrolled in one.(ref: World Council of Credit Unions) They are concentrated in Quebec, where they are known as caisses populaires (people's bank), and on the Western prairies. In Canada, trade association memberships for credit unions is required. Canada has a 100% affiliation of its credit unions in their trade associations, referred to as credit union leagues.

The United States has nearly 85 million credit union members. In the US, federal credit unions may apply to the National Credit Union Administration for Low-Income Credit Union or LICU status. To qualify for LICU status, the majority of the credit union's membership meet specific requirements in order to be considered "low-income". This LICU status allows the credit unions to benefit from certain NCUA programs to enhance its capacity to serve underserved populations who may otherwise lack access to credit or other financial services. In addition, some state regulators also provide for similar low-income designations.

As of the end of 2005, the National Credit Union Administration (NCUA) insured more than $515 billion in deposits at 8,695 nonprofit cooperative US credit unions. For comparison, the Federal Deposit Insurance Corporation (FDIC) insured more than $3,000 billion in deposits at 8,900 banks and thrift institutions. The NCUA and the FDIC are both independent federal agencies backed by the full faith and credit of the US government.

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See also

List of credit unions

Cooperative

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External links

US: Credit Union National Association is a trade association for US credit unions

US: Boston merchant Edward Filene, a key figure in the founding U.S. credit unions

US: National Credit Union Administration regulates all Federal credit unions and insures most US credit unions (through its National Credit Union Share Insurance Fund, aka NCUSIF).

US: Credit Unions Online is a credit union directory providing searches of credit union Web sites worldwide.

"How to Join a CU" finds US credit unions by location, employer, or affiliation

Bankrate lists US credit unions by state

CreditUnions.com is a community portal and financial/contact data resource for all U.S. credit unions]

INTERNATIONAL: World Council of Credit Unions is a trade association for credit unions worldwide headquartered in Madison, WI.

INTERNATIONAL: Credit Union Exectives Society is an individual association for credit union leaders worldwide

UK: Association of British Credit Unions largest national body for British Credit Unions

Canada: Department of Finance Canada

Ireland: Irish League of Credit Unions representative and services agency.

Australia: Credit Union Services Corporation represents 85% of the credit unions.

Retrieved from "http://en.wikipedia.org/wiki/Credit_uni...

Categories: Cooperatives | Credit unions | Financial institutions

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