As financial cooperatives, credit unions operate under a different set of rules than big banks. So what exactly is a cooperative? Here are 7 principles of cooperatives, as explained by the National Credit Union Foundation (NCUF) that make them stand out:
1. Voluntary and open membership.
Credit unions open their doors to people regardless of their race, gender, or financial situation. As not-for-profit institutions, they are devoted to their members’ financial wellness, and not to make a profit.
2. Democratic member control.
Co-ops operate on a democratic platform, meaning one vote, one member no matter their financial status. Each credit union has a board of directors that serve on a volunteer basis.
3. Member economic participation.
Members are both owners and customers. The more people that participate, the more can be given back in the form of more products, lower loan rates, higher savings yields, and fewer fees.
4. Autonomy and independence.
Cooperatives are owned by members, not shareholders, making each member the boss.
5. Financial education, training, and information.
Credit unions are committed to providing financial education to their members and to the community at large. From budgeting basics to retirement planning and how credit works, they do all they can to ensure that the general public and policymakers are informed.
6. Cooperation among cooperatives.
Working together, financial cooperatives are there when you need them. Credit unions provide more ATMs than the world’s largest bank.
7. Concern for the community.
Credit unions are passionate about serving their members and about making an impact in the community. They volunteer for local charities and participate in causes to make a difference.
To learn more about the principles of a cooperative, check out this video by the National Credit Union Foundation (NCUF):