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What is a Credit Union?
Michalis 'BIG Mike' Kotzakolios

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Many people do not understand what the difference is between a credit union and a bank. A bank is a financial institution that has been chartered by its state of operation, or the federal government. During its regular business hours, it does most of the following activities; it receives money and allows withdrawals of the money in a personís bank account. It pays interest, makes loans, issues cashierís checks, issues drafts and collects the same. The other is a cooperative, which conducts itself similarl,y but is owned and operated by those who are members in the intuition. It is run by and for those members.

Overall, the cooperatives offer the same services as a bank. They have savings and checking accounts, offer credit cards, and offer online banking and certificates of deposit. One definite difference is that they frequently have higher interest rates for their members than the banks offer. Unlike banks, the size of a credit union can vary greatly from one to another. It is not uncommon for a cooperative like this to be run by a handful of volunteers with a small membership. But it is also not uncommon to find ones that have tens of thousands of members and assets in the billions.

Due to the fact that these financial institutions are for members only, there must be some way to determine who is allowed to join. This is done by what is called a bond of association. A credit union must confine its member base to some form of common bond. This could be people who work in the same profession, live in a very specific area, belong to the same place of worship or even attend the same school. To keep their members, most of these cooperatives adopt as part of the rules the philosophy that once a member always a member. That means that even when a member changes professions or moves out of the area, they can remain part of the cooperative as long as they do not close their account. Someone who closes an account and tries to reopen it later may not have the best of luck when trying to rejoin.

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