What is the purpose of a credit union?
The primary purpose of credit unions is to encourage thrift and make loans to members. As non-profit institutions, credit unions can typically charge lower rates for loans and pay higher dividends on shares. Rather than paying profits to stockholders, credit unions return earnings to members in the form of dividends or improved services.
The primary purpose in furthering their goal of service is to encourage members to save money. Another purpose is to offer loans to members. In fact, credit unions have traditionally made loans to people of ordinary means. Credit unions can charge lower rates for loans (as well as pay higher dividends on savings) because they are nonprofit cooperatives. Rather than paying profits to stockholders, credit unions return earnings to members in the form of dividends or improved services.
A. The philosophy of the credit union movement is Not for Profit, Not for Charity, But for Service. Credit unions promote thrift and teach the wise use of credit. Credit unions encourage their members to develop a systematic savings program and they provide a source of low-cost credit. Because credit unions are not-for-profit and have low overhead costs, they are usually able to offer lower interest rates on loans and higher dividends on members’ shares (savings). A credit union is also nonprofit in the sense that its purpose is to serve the members, not to make money. It needs money to provide services and benefits. But money is the means, not the end itself.
The primary purpose in furthering their goal of service is to encourage members to save money. Another purpose is to offer loans to members. In fact, credit unions have traditionally made loans to people of ordinary means. Credit unions can charge lower rates for loans (as well as pay higher dividends on savings) because they are not-for-profit cooperatives. Rather than paying profits to stockholders, credit unions return earnings to members in the form of dividends or improved services.
