This history of the credit union movement and its guiding principles are based on cooperative activities during the 19th century, first in England and then in Germany. These principles and the idea that people should be able to pool their money to make loans to each other at competitive rates continue to serve as the cornerstones for all credit unions today.

Farmers who were turned away by traditional banks joined a financial cooperative founded by Frederich W. Raffeisen. The mission was to loan money to farmers so they could plant their crops. The credit union prospered as it loaned money at reasonable rates.

Alphonse Desjardins of Quebec, Canada, is credited for bringing the credit union concept of “people helping people” to North America. Desjardins formed a credit union for working-class people who were at the mercy of loan sharks and their high interest rates. Massachusetts businessman Edward Filene later introduced the first credit union to the United States, guided by these cooperative principles:

• Only people who are Members would borrow there;
• Loans are made for “prudent and productive” purposes;
• A person’s desire to repay (character) is more important than the ability (income) to repay. Members are, after all, borrowing their own money and that of their friends.

Credit unions today are largely full-service financial institutions offering sophisticated products and services to consumers and businesses. These include checking, savings, certificates of deposit, money market accounts and loans for vehicles, homes, debt consolidation, businesses, credit cards and more. What hasn’t changed throughout the years is credit unions’ focus on the philosophy of “people helping people” and their founding principle of “people, not profits.”