Credit union is a cooperative banking association operated exclusively for the benefit of its members. The members pool their savings and borrow money at a rate of interest sometimes lower than the interest charged by most banks. Credit unions are often organized among the employees of companies or members of farm groups, labor unions, and educational, religious, and social institutions. In the United States, deposits are insured up to $250,000 per account by the federal government.
Cooperative credit societies originated in Germany during the 1840’s. Alphonse Desjardins organized the first credit union in North America in 1900 in Levis, Quebec. Desjardins helped set up the first credit union in the United States in Manchester, New Hampshire, in 1908. In 1909, Massachusetts became the first state to legalize credit unions. Desjardins helped draft the new law. Boston merchant Edward A. Filene became a leader in the development of American credit unions. Today, more than half of all credit unions in the United States operate under federal charters and are supervised by the National Credit Union Administration. The others are chartered by individual states.
