What are credit unions?

Credit unions are member-owned financial cooperatives which serve their members’ financial needs. They provide a variety of services; however, they differ substantially from commercial providers in as the following ways:

  • Credit unions are democratic, member-owned financial cooperatives. They are locally owned community institutions controlled by their members on the basis of a one-member, one-vote system. Services are provided to members only.
  • Membership is based on the existence of a common bond among members which can be geographical, associational or based on another common interest.
  • Credit unions are not-for-profit institutions. Excess earnings are used to offer members more affordable loan rates, a higher return on savings, or lower fees for products. In this way, profits are re-distributed to the credit unions’ members.
  • Governance responsibilities are overseen by a board of directors serving the credit union on a voluntary basis. The board is elected from within the membership. Each credit union member, regardless of account size in the credit union, has one vote and may run for the board.
Credit unions’ core business consists of savings and loans, but in a number of member states credit unions increasingly also offer current account services (and related services such as internet banking, ATM access or direct debit), payments, mortgages, and insurance. Credit unions provide personal services to their members and help them develop their financial literacy and money management skills.

Credit unions’ reach within Europe

Credit unions trace their roots to the humble beginning in 19th century Europe. Franz Hermann Schulze-Delitzsch established the first credit unions in the 1850s in Germany to give those lacking access to financial services the opportunity to borrow from the savings pooled by themselves and their fellow members. Friedrich Wilhelm Raiffeisen transported the financial cooperative concept to rural Germany a decade later.
Today, credit unions operate in a number of European countries including in the Republic of Ireland, Estonia, Romania, Poland, the United Kingdom and the Republic of North Macedonia. Credit unions make an important contribution to the European social economy by supporting thousands of communities and more than 7 million European households with affordable financial services.