A financial institution that is cooperative in nature and is controlled and owned by its members is a credit union. It is a non-profit organization that provides services for its members, such as loans at rates that are reasonable, savings accounts and other services of finance. A person must be a member of an organization that sponsors a credit union in order to join one. After depositing money in a credit union, a person then becomes a member of the credit union because the deposit is makes the person a partial owner of the credit union.

Credit unions around the world vary a great deal in the amount of total assets each one can have and the average size of the assets of an institution. Some credit unions are small with only volunteer operations with a small number of members while others have hundreds of thousands of members and several billion dollars in assets. In terms of assets, credit unions are usually smaller than banks.
Credit unions are described by the World Council of Credit Unions as not for profit institutions that are cooperative in nature. However, this definition can vary depending on the location of the credit union. Canada, for example, regulates credit unions are institutions that make a profit whose goals are to earn a reasonable profit for their members in order to enhance services and provide for a stable growth.

A credit union has an unusual structure to its organization in that it needs to insure that the owners and the users of the credit union are the same people. In general, donations are not accepted by a credit union and the credit union must be able to succeed in a competitive market economy.
Credit unions are known by different names in other countries depending on the philosophy of that country’s financial approach to credit unions.

Although the history of credit unions dates back to 1852 when Franz Herman Schulze Delitzsch consolidated two financial institutions to create the first recognizable credit union in the world. Friedrich Wilhelm Raiffeisen is recognized as creating the first set of rural credit unions in 1864. This was important because Germany’s rural communities had many fewer financial institutions than the cities and were considered not able to be banked because of small, seasonal cash flows and limited human resources. By the year 1888, credit unions had extended to other countries in Europe, including France, Italy, England, the Netherlands and Austria.

Canada was the home to the first credit union in North America. It was opened on January 23, 1901 with a deposit of ten cents and founded by Alphonse Desjardins, a reporter in the Canadian parliament. The first of the credit unions in the United States was St. Mary’s Bank Credit Union of Manchester, New Hampshire, founded by French-speaking immigrants from Quebec to Manchester on November 24, 1908.

This was followed a year later by two men in Massachusetts, Pierre Jay, Massachusetts Commissioner of Banks, and Edward Filene, a merchant of Boston, who established legislation that enabled the creation of credit unions. Along with the Women’s Education and Industrial Union, and some assistance from Desjardins, the Industrial Credit Union was created on November 23, 1910, which was established for all people in the surrounding areas of Boston. Three years later, in 1913, St. Mary’s Credit Union was established in Marlborough, Massachusetts and served anyone who lived in the Commonwealth of Massachusetts.

In 1934, the Federal Credit Union Act was passed by Congress and enabled credits unions to be established anywhere in the United States. The credit unions could be incorporated under either state or federal law, which enables dual chartering, a system that is still in existence today.