Credit union

In the context of financial inclusion, credit unions claim to provide a broader range of loan and savings products at a much cheaper cost to their members than do most microfinance institutions.

[20] Credit unions are "not-for-profit" because their purpose is to serve their members rather than to maximize profits,[18][20] so unlike charities, credit unions do not rely on donations and are financial institutions that must make what is, in economic terms, a small profit (i.e., in non-profit accounting terms, a "surplus") to remain in existence.

[24] The countries with the highest percentage of credit union members in the economically active population were Barbados (82%),[26] Ireland (75%), Grenada (72%), Trinidad & Tobago (68%), Belize and St. Lucia (67% each), St. Kitts & Nevis (58%), Jamaica (53% each), Antigua and Barbuda (49%), the United States (48%), Ecuador (47%), and Canada (43%).

Several African and Latin American countries also had high credit union membership rates, as did Australia and South Korea.

[32] In 1864, Friedrich Wilhelm Raiffeisen founded the first rural credit union in Heddesdorf (now part of Neuwied) in Germany.

[32] By the time of Raiffeisen's death in 1888, credit unions had spread to Italy, France, the Netherlands, England, Austria, and other nations.

[33] The first credit union in North America, the Caisse Populaire de Lévis in Quebec, Canada, began operations on 23 January 1901 with a 10-cent deposit.

Founder Alphonse Desjardins, a reporter in the Canadian parliament, was moved to take up his mission in 1897 when he learned of a Montrealer who had been ordered by the court to pay nearly Can$5,000 in interest on a loan of $150 from a moneylender.

Drawing extensively on European precedents, Desjardins developed a unique parish-based model for Quebec: the caisse populaire.

Several Little Canadas throughout New England formed similar credit unions, often out of necessity, as Anglo-American banks frequently rejected Franco-American loans.

[36] After being promoted by the Catholic Church in the 1940s to assist the poor in Latin America, credit unions expanded rapidly during the 1950s and 1960s, especially in Bolivia, Costa Rica, the Dominican Republic, Honduras, and Peru.

By 1988 COLAC credit unions represented four million members across 17 countries with a loan portfolio of circa US$0.5 billion.

However, from the late 1970s onwards many Latin American credit unions struggled with inflation, stagnating membership, and serious loan recovery problems.

Significant withdrawals and high default rates caused liquidity problems for many credit unions in the region.

If a credit union or traditional bank is unable to maintain positive cash flow and/or is forced to declare insolvency, its assets are distributed to creditors (including depositors) in order of seniority according to bankruptcy law.

Based outside of Washington, D.C., NAFCU's mission is to provide all credit unions with federal advocacy, compliance assistance, and education.

State-chartered credit unions are overseen by the state's financial regulatory agency and may, but are not required to, obtain deposit insurance.