Credit Union

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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 competitive rates, and providing other financial services to its members. Many credit unions exist to further community development[4] or sustainable international development on a local level, and could be considered community development financial institutions.


Worldwide, credit union systems vary significantly in terms of total system assets and average institution asset size, ranging from volunteer operations with a handful of members to institutions with several billion dollars in assets and hundreds of thousands of members. Credit unions are typically smaller than banks; for example, the average U.S. credit union has $93 million in assets, while the average U.S. bank has $1.53 billion, as of 2007.

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The World Council of Credit Unions (WOCCU) defines credit unions as "not-for-profit cooperative institutions". In practice however, legal arrangements vary by jurisdiction. For example in Canada credit unions are regulated as for-profit institutions, and view their mandate as earning a reasonable profit to enhance services to members and ensure stable growth.


This difference in viewpoints reflects credit unions' unusual organizational structure, which attempts to solve the principal-agent problem by ensuring that the owners and the users of the institution are the same people. In any case, credit unions generally cannot accept donations and must be able to prosper in a competitive market economy

Other names

In some places, credit unions are called by other names; for example, in many African countries they are called "savings and credit cooperative organizations" (SACCOs), "to emphasize savings before credit." In Spanish-speaking countries, they are often called cooperativas de ahorro y crédito,but in Mexico they are typically called a caja popular. French terms for "credit union" include caisse populaire and banque populaire. Afghan credit unions are called "Islamic investment and finance cooperatives" (IIFCs) and comply with Islamic banking practices.

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