What is a Credit Union?
The credit union is a novel concept in financial institutions. Like other financial institutions, credit unions offer a host of services including savings and checking accounts, loan products, even insurance and investment products. Credit unions also provide branch, ATM and internet access as part of their services. What makes credit unions different is who owns them.
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, Mission Fed invests its earnings directly into serving its member/owners. That's why credit unions can consistently offer higher interest rates on deposits than banks, as well as charge lower interest rates on loans and lower fees on transactions. In addition, being member-owned puts a premium on providing good service to members. Customer service at credit unions is personal, friendly and always 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 insurance to safeguard the deposits of their members. So in 1970, Congress created the National Credit Union Share Insurance Fund (NCUSIF), administered by the National Credit Union Administration (NCUA). On October 3, 2008, the Emergency Stabilizaton Act of 2008 was signed into law. The act 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 member credit unions.
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 rates, low fees and friendly, and personalized service - 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 nearly every type of loan imaginable and many types of insurance. We also offer investment services and advice,* which are available through our broker dealer, CUSO Financial Services, L.P. (CFS). This can all be provided at substantial savings to you, made possible by the cooperative, not-for-profit model of a credit union.
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?
*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.