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What is a Credit Union

The World Council of Credit Unions describes the role of a credit union as being non-profit organisation cooperatives. There are credit unions all over the world, all have different strategies but more or less the same focus. Some credit unions are only small, running with a just a handful of members on board. Others are huge and have millions of members.

Because they are classed as non-profit, a credit union is unable to make a profit on the financial services it offers. However, a recent ruling now allows unions leeway to make a reasonable profit in order to improve services to both its customers and members. Credit unions are run by a board of directors. These directors are voted in by other members. Because members invest different amounts of money, voting is usually in line with the amount invested. However, unions in the UK and the US operate a one vote per member system, regardless of how much a person has invested in the pot.

The directors of a credit union not only look after the general running of the union, they also get to decide what services they offer. Most of the large credit unions offer similar services as a high street bank including savings accounts, online banking and even credit cards. In order to keep running their union, it must prove it is able to stand the test of time in a sometimes unstable market.

A credit union also puts back in to the local community it exists in. Depending on the size of the union, many have been responsible for building new homes and improving transport networks.

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