Credit Union History
The history of the credit union movement is based on the simple idea that people should pool their money to make loans to each other at competitive rates. The credit union industry’s guiding principles that fueled the movement’s growth are based on cooperative activities during the 19th century first in England and then in Germany. These principles continue to be the cornerstones for all credit unions today. Following is a brief look at the history of credit unions.
- Credit unions started with German farmers pooling their resources.
1880s
Credit Unions were started in the 1800s when farmers, who had been turned away for loans by traditional banks, decided to form their own “credit union.” Frederich W. Raffeisen founded a financial cooperative in Germany to grant loans to farmers with crop failure. The farmers pooled their funds and made loans to each other at reasonable rates, allowing them to grow and prosper.
- "People Helping People" is the guiding principle of all credit unions.
1900s
The Credit Union concept of “people helping people,” and the pooling of resources for the common good took hold. The movement grew stronger in Europe, then Canada, and finally came to America in the 1900s.
Alphonse Desjardins of Quebec, Canada was the first to adopt the concept born in Europe. In response to outrageous interest rates charged by loan sharks, Desjardins organized a credit union that provided relief to the working class.
To better the lives of his employees, Edward Filene, a progressive thinker and a businessman, introduced the first credit union in the United States.
Founded on a truly cooperative spirit, the ideals and guiding principles have remained the same:
- Only people who are credit union Members would borrow there;
- Loans are made for “prudent and productive” purposes;
- A person’s desire to repay (character) is considered more important than the ability (income) to repay. Members are, after all, borrowing their own money and that of their friends.
- Elaine Bossa Bacigalupi: First Member of Redwood Credit Union
21st Century
Today, credit unions are largely full-service institutions offering many of the same services as banks and other financial institutions – including checking, savings, certificates and money market accounts and loans for vehicles, homes, debt consolidation and more.
Credit Union Advocacy
The uniqueness of credit unions and the benefits they provide is why it is important to support your credit union by making your voice heard in support of the credit union industry. Find out more about becoming a credit union advocate and join the movement.
Credit Union Difference
The credit union difference explains how we are different, why credit unions are important, and how Members benefit.
Connect For The Cause
Connect For The Cause is a website created by The California and Nevada Credit Union League to allow credit union supporters to voice their opinions on a wide range of issues that impact credit unions and our Members. If you are not already registered, we encourage you to sign up now: www.connectforthecause.org
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