Definition of credit union

This is a mutual financial organisation formed and managed by a group of people with a common affiliation, such as employees of a company or a trade union. When you deposit money into a credit union, you become a member and a partial owner.

Members save money together and they can borrow at competitive interest rates, compared to banks, and take a share in the profits.

Source: Financial Times

In 1865, Friedrich Wilhelm Raiffeisen developed the concept of the credit union. From 1870, unions expand across the German states. The co-operative movement spreads to Europe, north America and developing countries.

Source: Tim Harford, Columnist, Financial Times

Example

Some of its radical critics might think it is a sinister world government, but the International Monetary Fund is in essence a big credit union. Its 185 member countries place money on deposit at the IMF – on which they receive interest – which is lent out to governments in crisis.

Source: Alan Beattie, World Trade Editor, Financial Times

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