credit union

noun
Updated on: 26 Jul 2017

Definition of credit union

:a cooperative association that makes small loans to its members at low interest rates and offers other banking services (such as savings and checking accounts)

First Known Use of credit union

1843


Financial Definition of CREDIT UNION

credit union

What It Is

A credit union is a financial institution that is owned and controlled by its members rather than shareholders. The members of the credit union pool their deposits and provide loans and other financial services to each other.

How It Works

The services offered by a credit union include a wide range of financial services, such as savings accounts, checking accounts, credit cards, certificates of deposit and online financial services.

A credit union’s fees, interest rates and levels of service are highly responsive to the needs of its members. Generally, they offer lower interest rates on loans and higher interest rates on savings accounts and certificates of deposit.

Credit unions may be formed among any group of members who have a common interest -- usually community groups or employees of a particular organization. The board members of the credit unions are usually volunteers. Credit unions are generally not-for-profit, so often profits are shared by members.

Why It Matters

Credit unions offer most of the same services as banks, but differ in that individual members are owners and there are generally less assets under management. Because credit unions are usually considerably smaller than banks, they are able to offer more personalized advisory services to their members and they may offer lower cost banking service.

Federal and most state-chartered credit unions in the United States are able to insure their members’ savings accounts through the National Credit Union Administration, a federal organization with the full faith and credit of the U.S. government.


CREDIT UNION Defined for English Language Learners

credit union

noun

Definition of credit union for English Language Learners

  • : an organization that gives small loans to its members at low interest rates and that offers savings and checking accounts


Law Dictionary

credit union

noun

legal Definition of credit union

:a cooperative association that makes small loans to its members at low interest rates and offers other banking services (as savings and checking accounts)

Learn More about credit union


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