What is a Credit Union?
A credit union is a cooperative financial institution that is owned and controlled by its members, and operated for the purpose of promoting thrift, providing credit at reasonable rates, and providing other financial services to its members. Many credit unions exist to further community development or sustainable international development on a local level.
Worldwide, credit union systems vary significantly in terms of total system assets and average institution asset size since credit unions exist in a wide range of sizes, ranging from volunteer operations with a handful of members to institutions with several billion dollars in assets and hundreds of thousands of members. Based on data from the World Council of Credit Unions, at the end of 2010 there were over 52,000 credit unions in 100 countries around the world. Collectively they served over 180 million members and oversaw US $1.5 trillion in assets.Credit Unions are governed by the Federal Government just as banks are. The NCUA oversees credit union operations while the FDIC oversees banking operations.
Credit unions differ from banks and other financial institutions in that the members who have accounts in the credit union are the owners of the credit union and they elect their board of directors in a democratic one person-one vote system regardless of the amount of money invested in the credit union. A credit union's policies governing interest rates and other matters are set by a volunteer Board of Directors elected by and from the membership itself. Credit unions offer many of the same financial services as banks, often using a different terminology; common services include: share accounts (savings accounts), share draft (checking) accounts, credit cards, share term certificates (certificates of deposit), and online banking.
Normally, only a member of a credit union may deposit money with the credit union, or borrow money from it. As such, credit unions have historically marketed themselves as providing superior member service and being committed to helping members improve their financial health. In simpler terms, "credit unions provide a broader range of loan and savings products at a much cheaper cost to their members than do most microfinance institutions."
-Wikipedia as of June 2012
For more information on Credit Unions check out:
The National Credit Union Administration