Credit Union - How Does A Credit Union Work? What Are The Concepts Of A Credit Union?
How does a credit union Work?
There are various rules and regulations observed in each credit union or organization. However, there are similarities in the types of services offered to its members.
These people are often gathered together due to a common interest. Then, contributions will be made by each member over a period of at least six months.
In case a member requires financial assistance, then they can lend money from the union and they will be charged with minimal interest rate.
That amount borrowed is payable within the promised period of time, such as 6 months or as long as 2 years,
At the end of each year, the management will openly discuss with members all profits generated through the union and will be split equally amongst its members.
This is one reason why this particular method is utilized in communities or parishes because there is fair chance for everybody to benefit from it.
What are the concepts of credit union?
There are also different concepts available for a credit union, however it basically refers to a cooperative financial institution run and operated by all members.
Aside from obtaining loan or financial assistance with minimal interest rate, another advantage
It is important to differentiate credit unions from a profit-driven cooperative association. The latter is focused more on providing various financial services only for its members. On the other hand, a credit union is united by a “common bond” shared among its members and this can be basically anything, such as church group, source of employment, or an organization that they all belong into.
Thus, this concept is not entirely new in the modern society because it has existed for a long time, albeit the fact that it has greatly evolved.