The Credit Union Movement and Our Philosophy
Credit union origins are found in mid-1800s Europe. Banks were reluctant to lend money to certain individuals or groups, and these underserved consumers pooled their resources and formed cooperatives, enabling them to provide financial services to each other. That tradition of partnership exemplifies the same philosophy credit unions espouse today: "people helping people." More than 1.3 million Utahns are member-owners of the state's credit unions.
Credit unions exist to serve the needs of members. Credit unions educate members about sensible money management to help improve their financial condition. This service-oriented philosophy is the most significant benefit of credit union membership. Credit unions are organizations of people, not of money.
As part owners, members have the right to vote on decisions affecting the credit union. With this power, members ultimately control the direction of the credit union, without regard to their volume of business or the amount of their investment. One member has one vote, no matter if his or her deposit is $25 or $25,000.
Credit unions are legally required to retain reserves that ensure their safety and soundness. The credit union's volunteer board of directors determines how funds beyond the legal requirements are distributed. In effect, members decide how the money is spent. Some of the money is used to build branches or buy equipment to provide high-quality financial services.
As not-for-profit organizations, credit unions cannot issue stock to gain capital. Instead, capital must be earned through growth. The only way a credit union can grow is attracting savings and loan accounts. Through this growth, credit unions set aside reserves. These reserves fund loan losses, buildings, and equipment acquisition. Excess monies are returned to members in the form of lower loan rates and higher returns on savings.
A 2001 study commissioned by the Utah League of Credit Unions indicated that credit unions save Utah residents over $100 million a year. These are real dollars that benefit you and your family.
