History of Credit Unions
What is a Federal Credit Union?
What makes credit unions different is who owns them. Watch this video to learn more about the differences between banks and credit unions.
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How Credit Unions Work
Unlike profit-driven financial institutions beholden to outside shareholders, a credit union is a cooperative, owned by its membership. In essence, the members loan money to each other with their deposits. As a not-for-profit credit union in San Diego, Mission Fed invests its earnings directly into serving its members/owners. That’s why credit unions can usually charge lower loan rates than banks, as well as offer higher rates on deposits and lower fees on debit and credit card transactions. In addition, being member-owned puts a premium on providing good service to members. Customer service at credit unions is personal, friendly and highly ranked by credit union members.
Credit Union Charter
As a member-centric enterprise, a credit union is typically organized to serve a specific field of membership, such as a vocation (medical, civil service, education, etc.), locality, individual employer (Boeing and IBM have their own employee credit unions for instance) or place of worship. Services and benefits are tailored to the unique needs of the field of membership. Mission Fed’s field of membership was originally for those associated in one way or another with the educational community in San Diego County. In 2003, our charter expanded to serve anybody who lives, works, attends school or worships in San Diego County.
History of Credit Unions, Germany 1800s
In 1846, Germany experienced a crop failure and famine. To provide relief to farmers, a man named Herman Schulze-Derlitsch formed a cooperatively-owned mill and bakery to sell bread to farmers at significantly reduced prices. He extended the concept to credit a few years later, organizing the first cooperative credit society. Around the same time, another gentleman named Friedrich Raiffeisen wanted to make it easier for farmers to get credit to purchase livestock, equipment, seeds, and other essentials. He too formed a credit union. These early unions would provide the inspiration for all credit unions to come.
The first credit union in North America was formed in Quebec in 1900 in answer to the outrageous interest charged by loan sharks of the day. Finally, the working class had affordable access to credit.
Affordable Credit and Banking
The concept of affordable credit and banking for the working class quickly caught on in the United States and credit unions enjoyed robust growth in the ensuing decades. In 1934, President Roosevelt signed the Federal Credit Union Act into law, authorizing the establishment of federally chartered credit unions in all states. Over the next four decades, credit union membership would swell to more than six million people at over 10,000 federal credit unions.
Safe and Secure
By the late 1960s it was clear that like banks, credit unions would need deposit insurance and stricter policies to safeguard their members. So in 1970, Congress created the National Credit Union Share Insurance Fund (NCUSIF), administered by the National Credit Union Administration (NCUA). In 2008, the Emergency Stabilization Act was signed into law and increased insurance coverage on all accounts up to at least $250,000. And, in keeping with the independent spirit of credit unions, not one penny has come from tax dollars to maintain the fund; it’s capitalized entirely by its credit union membership accounts.
Today’s Credit Union
All your financial needs are now met in one place! Today’s credit union gives you all the historic benefits of credit unions, including great loan rates, low fees and friendly, and personalized service for accounts - plus all kinds of additional products and services to help you with your current and future financial needs.
For instance, Mission Federal Credit Union provides you not only federally insured deposit accounts, but also a variety of loan products. We also offer investment services and advice,* which are available through our broker dealer, CUSO Financial Services, L.P. (CFS). We also work with insurance providers to provide options for our members. This can all be provided at substantial savings to you, made possible by the cooperative, not-for-profit model of a credit union. Whether you are looking to invest in real estate or you need to open your first checking account, our team at Mission Federal Credit Union is here to guide and support you with our financial services.
Most importantly, as a credit union member/owner, you’ll enjoy peace of mind you simply won’t find at other financial institutions. After all, who better to provide financial services and advice you know you can trust than the organization you own yourself?
* (1) Investment Representatives are registered through CUSO Financial Services, L.P. (CFS), member FINRA/SIPC. Products and services offered by CFS are not NCUA/NCUSIF insured, are not credit union guaranteed, and may lose value. Mission Federal Credit Union is in partnership with CFS. (2) Insurance products are offered through Mission Fed’s business relationships and are not insured by NCUA; not a deposit of, nor guaranteed by Mission Fed, and may lose value.
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