The Credit Union Difference Part 1: The History of Credit Unions

As a member of DoverPhila Federal Credit Union, you know credit unions are always striving to serve their members and community in much as possible. We value each member’s input as an equal owner in the credit union, and we offer flexible loan terms, low-cost accounts, and higher dividends to help members achieve and maintain financial wellness. 

This article is the first in a series celebrating the history, contributions, and benefits of credit unions. 

Both credit unions and banks provide consumers with financial services and products, but there are many distinctions between the two. The primary credit union difference lies at its core; Banks are created to generate profit for owners while credit unions are created to provide members with a place to manage their finances at the best possible terms. 

The goal of putting members first is deeply rooted in the history of the credit union movement. 

The first credit union was established in 1864 by Friedrich Raiffeisen in southern Germany. Raiffeisen proposed that all community members pool resources so individuals in need of loans could easily access the necessary funds. Raiffeisen’s idea was well-received, and the first credit union model was soon established. 

In 1909, the credit union movement reached American shores. With Edward Filene serving as its pioneer, the movement gained momentum and continued to grow. In 1920, Edward hired attorney Roy F. Bergengren to assist him in generating the movement’s expansion. Roy created a more systemized concept for the credit union we know today. 

In 1934, President Franklin D. Roosevelt signed the Federal Credit Union Act into law.

Federally chartered credit unions in every state were legally authorized to create a system of not-for-profit cooperatives to promote thrift and sound financial practices. 

 In 1970, the public’s confidence in the credit union model grew stronger as the National Credit Union Share Insurance Fund was established. With it, credit union deposits became federally insured much like the FDIC insures bank deposits. 

The credit union movement was growing at its most rapid pace, with credit union assets in America tripling between 1970 and 1979. Then, in 1977, another credit union-friendly regulation was signed into law, empowering credit unions to offer more services and products to members. 

Today, the credit union movement continues to thrive in the path charted by its predecessors and is backed by the “full faith and credit of the United States Government.” These not-for-profit institutions serve their 103 million+ members by always putting their members’ needs first and helping them achieve their personal goals through sound financial practices and targeted advice.   

Here at DoverPhila Federal Credit Union, we’re proud to be a part of the collective institutions dedicated to the credit union mission. At the core of our values is an unwavering commitment to creating mutual benefits for members and the larger community. To that end, we are always here to help our members and enable them to optimize their savings or manage finances as smoothly as possible. Our innovative banking solutions, low fees, and high dividend rates, along with personalized service, helps members achieve and maintain financial wellness no matter the financial goals they have. As a member-owned institution, our only objective is your satisfaction and your success. 

Credit union history is still in the making. Be a part of it by clicking here or stopping by DoverPhila today to learn about our exceptional financial products and to benefit from our highly personalized service. 

Do You Know the Credit Union Difference?

Credit unions help consumers reach their financial dreams through its people helping people philosophy. Respondents in a 2017 Consumer Survey don by the Ohio Credit Union League were asked what they found to be the most significant difference between credit unions and other financial institutions. Here were the results:

  • 35% of respondents: lower interest rates on loans
  • 34% of respondents: fewer and lower fees compared to other financial institutions
  • 24% of respondents: credit unions are member-owned, with profits going back to benefit members

Credit unions are known for their service-centric model, and 90 percent of the respondents to the League’s survey rated the service they received from credit unions as “outstanding.” The American Customer Satisfaction Index consistently shows credit unions deliver excellent service to members. The most recent report, on its 100-point scale, ACSI said credit unions received an overall score of 82, up from 81 the previous year.

The World Council of Credit Unions data indicates there are 231.2 million credit union members worldwide who belong to 68,880 credit unions in 109 countries. According to the Credit Union National Association there were 110.6 million members of 5,812 credit unions in the United States as of June 2017.

In Ohio, the state’s 284 credit unions serve 2.9 million members. According to a CUNA’s Member Benefits Index, by choosing a credit union as their financial institution, those members received more than $206 million in direct financial benefits in the past year.

Credit unions serve a common field of membership based on characteristics such as a geographical area, employee groups, or membership in an organization. Every resident of Ohio is eligible to join a credit union, and deposits are protected by the federal government’s National Credit Union Administration insurance or the private American Share Insurance. So, if you’re trying to decide on a financial institution, keep the following in mind:

  • Do your research: Online reviews, consumer surveys, and regulatory agency reports are all good resources to find out how financial institutions treat consumers and how business is conducted. The FDIC (banks) and NCUA (credit unions) each have searchable databases on the size, financial health, and insurance status of the financial institutions they regulate
  • Compare your needs with their strengths: If you primarily conduct your financial transactions online, then you will want an institution that offers online or mobile banking. If ATM fees are an issue, then look for surcharge-free networks or institutions that reimburse you for fees. If you need advice on planning for the future, choose an institution with a strong financial wellness program. If you need a car loan or a mortgage, look for the lowest interest rates on loans
  • Choose to be involved: If you have an account with a credit union, you are both a member and an owner. This process guarantees you a voice and ensures that your credit union is looking out for your best financial interests and not that of a small group of stockholders.

Whether you are looking for your first loan, would like to start a small business, or just want to get rid of debt, a credit union can help. They offer many of the same services as other financial institutions, but are not-for-profit. They treat you like a person, not a dollar sign.