This article is the first in a series celebrating the history, contributions and benefits of credit unions.
Both credit unions and banks provide a broad range of financial services and products. However, there are multiple distinctions between the two. The primary credit union difference lies at its core: Banks are created to generate profit for their owners; credit unions are created to provide members with a place to manage their finances at the best possible terms.
The goal of putting members first is deeply rooted in the rich history of the credit union movement.
The first credit union was established in 1864 by Friedrich Raiffeisen in rural southern Germany. Raiffeisen believed his neighbors and friends could enjoy an enhanced standard of living and avoid lending from loan sharks, if only they had access to common funds. He proposed that all community members pool their resources so individuals in need of loans could easily access the necessary funds. Raiffeisen’s idea was well received by his community, and the first credit union model was soon established.
In 1909, the credit union movement crossed the ocean to reach American shores. With Edward Filene serving as its pioneer, the movement gained momentum and continued its growth. In 1920, Edward hired attorney Roy F. Bergengren to assist him in generating the movement’s expansion. Roy soon created a more systemized concept for the credit union model we know today.
Credit unions were gaining popularity and popping up all over America, but it was only in the 1930s that the credit union movement achieved federal recognition and national acceptance.
When President Franklin Delano Roosevelt signed the Federal Credit Union Act into law in 1934, federally chartered credit unions in every state became legally authorized to create a system of not-for-profit cooperatives to promote thrift and sound financial practices.
The Federal Credit Union Act enhanced the public’s confidence in the credit union movement and it continued to spread across the country. In 1970, that sense of security grew stronger when the National Credit Union Share Insurance Fund was established. Credit union deposits gained federal insurance that functions much in the way the FDIC insures bank deposits; so your money is always safe at Education First!
With the credit union movement growing at a rapid pace, prospective members flocked to join the new member-owned financial institutions being established all over the U.S. In fact, between 1970 and 1979, credit union assets in America tripled.
Today, the credit union movement continues to thrive in the path charted by its predecessors. These not-for-profit institutions serve their 103 million+ members by always putting their members’ needs first and helping them achieve their personal goals through sound financial practices and targeted advice.
Education First Credit Union is proud to be a part of the collective institutions dedicated to the credit union mission. At the core of our values is an unwavering commitment to creating mutual benefits for members and the larger community. To that end, we are always here to help our members and enable them to optimize their savings or manage finances as smoothly as possible. Our innovative banking solutions, low fees and high dividend rates, along with personalized service, helps members achieve and maintain financial wellness no matter the financial goals they have. As a member-owned institution, our only objective is your satisfaction and your success.
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