First Known Use of credit union
Financial Definition of CREDIT UNION
What It Is
How It Works
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
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
legal Definition of credit union
Learn More about credit union
Britannica.com: Encyclopedia article about credit union
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