What is a Credit Union?

Originated in Europe around 1844, the credit union was intended to allow people to pool their money and make loans to one another. This concept came to North America around 1900 for similar reasons – people were poor and with high consumer interest rates, they needed an affordable way to borrow money.

The credit union movement included three primary principles:

• Only a member of a credit union may deposit money with the credit union, or borrow money from it.
• Loans were made for prudent and productive purposes.
• Repayment of loans was based on a person’s character and credit.

Today, these principles still govern most credit unions worldwide.

A credit union is a cooperative financial institution, owned and controlled by the people who use its services. These people are called members. Credit unions are also controlled through the election of a group of members who also serve on the Board of Directors. Credit unions serve groups that share something in common, such as where they work, live, or go to church. Credit unions are not-for-profit, and exist to provide a safe, convenient place for members to save money and to get loans at reasonably low rates. Credit unions are often more competitive than banks and savings and loan associations because its nonprofit status makes its operating costs lower.

What makes a credit union different from a bank or savings & loan? Like credit unions, these financial institutions accept deposits and make loans–but unlike credit unions, they are in business to make a profit. Banks and savings & loans are owned by groups of stockholders whose interests include earning a healthy return on their investments.

AOD Federal Credit Union’s main goal is to make service and benefits to members its highest priority. AOD Federal Credit Union also places a strong emphasis on people and strongly values member involvement. That’s why all our members who are in good standing have the opportunity to vote for our Credit Union’s Board of Directors. We feel that it is important for you to have a voice in the way your credit union is managed. AOD Federal Credit Union also supports social and community programs that improve the quality of life for everyone.