Historically, credit unions were preceded by widespread development of credit cooperation in many countries of Europe and America. Borrowing rate for the credit union is a source of income to cover the administrative costs. All excess funds are returned to members in the form of dividends on savings. Credit unions encourage savings of citizens, setting compensation payments (interest) on savings and provide from these savings loans to their members. Credit cooperatives and credit unions exist in many different forms. The main differences relate to the nature of the membership and the opening of a credit institution. U.S. credit unions have another significant difference from the credit cooperatives of farmers: the first have major proportion of short-term loans, the second - long and mostly in real estate.
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Credit unions encourage savings of citizens, setting compensation payments (interest) on savings and provide from these savings loans to their members. Credit cooperatives and credit unions exist in many different forms. The main differences relate to the nature of the membership and the opening of a credit institution. Borrowing rate for the credit union is a source of income to cover the administrative costs. All excess funds are returned to members in the form of dividends on savings.
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Corporate credit unions are united on a cooperative basis in the Central Credit Union (US Central Credit Union). National Credit Union Administration (NCUA) - an independent federal agency, based in Washington (State of Columbia), established by the U.S. Congress to oversee the federal credit union system. To get a loan in the credit union a shareholder must be not only a formally adopted there, but necessary pay in cash contributions, the amount and order of payment of which approved by the General Assembly and fixed by the charter. Activity of the credit union consists of organizing mutual financial assistance by meeting the needs of its members in the services of saving and obtaining loans. Cooperation between credit unions, how they would not have been named, took place always, from the moment when the movement moved outside one credit union. Over 30% of the assets of credit unions are investments in government securities, certificates of deposit of banks and savings loan associations, as well as in the parent credit unions, and other risk-free investments. Standards by which credit unions build their work do not coincide with the standards and regulations of consumer cooperation of the usual type. Credit unions base their activities on savings of shareholders, their shares and savings contributions, which make up the fund of mutual financial assistance - a source of cash loans to shareholders.