Characteristics of Credit Unions

You’ve probably seen a credit union in your town, but you may be wondering what exactly a credit union is. Credit unions, or savings and credit cooperatives, are not-for-profit institutions owned by their members. These cooperatives seek to promote the best interests of their members rather than profit.

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Consumer cooperative

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Savings and credit cooperatives or, simply, credit unions are cooperative societies whose corporate purpose is to serve the financial needs of their members and third parties through the exercise of activities typical of credit institutions.

These cooperatives are usually local and seem to be more suited to rural areas. Above all, they have access to external funds and these are appropriately managed. And while there is a World Council of Credit Unions (WOCCU), there are few local or rural credit unions associated with it.

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They have a mixed nature that determines that, in the legal regime of these credit institutions, financial-credit and cooperative aspects converge, in which, at the same time, labor and commercial components have an impact.

What is a cooperative loan

With the Payment Order service we offer our members a reliable payment mechanism that allows them to meet their commitments in a safe and effective way, using the securities they have in their Demand Deposit account.

This loan is aimed at all “A” rated members with a current loan except with a coofamiliar, as a facility for the acquisition of miscellaneous household items, construction materials, among others.

This loan is guaranteed by an investment in a financial certificate held by the member in the institution. The member can have as many loans as he/she wishes according to the availability of the collateral (up to 90% of the value of the certificate).

Account that allows the member the availability of their savings through the institutional debit card, nationwide in any Visa affiliated establishment, availability of withdrawals at ATMs or through the cashier’s area of the offices.

The member will only be allowed to obtain one type of loan at a time, except in those cases in which the guarantee is financial certificates, lines of credit, special credits, Coop-Educativo Escolar, and contribution loans.

How a credit union works

Credit unions are not-for-profit, member-owned organizations. They are cooperative institutions in which members pool their resources to provide services to other members.

Banks are for-profit organizations typically owned by shareholders. They provide a variety of financial services in a manner that is efficient and guaranteed to maximize shareholder profit.

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Both banks and credit unions offer financing for large purchases and money management options, but they are not as similar as you might think. On average, credit unions offer more attractive rates and better returns on accounts.

While large banks charge high fees if your account falls below the required minimums, many credit unions have really low or no minimums, sometimes only $5 to $10.

Many credit unions have less restrictive lending requirements, so if a bank has denied you a loan, a credit union may be willing to work with you.