A cooperative credit union, also known as a co-op credit union, is a financial institution that is owned and operated by its members, who are also its customers. It is a type of credit union that follows the principles and values of cooperative banking.
In a cooperative credit union, individuals with a common bond, such as belonging to a specific community, profession, or organization, come together to pool their resources and establish a financial institution that provides various banking services. Members of the cooperative credit union have equal voting rights, regardless of the size of their deposits or assets, and participate in decision-making processes.
Cooperative credit unions aim to provide affordable financial services to their members, often focusing on savings, loans, and other credit-related products. They typically offer competitive interest rates on deposits and loans, as well as lower fees compared to traditional banks, as their primary objective is to serve their members rather than generate profits for external shareholders.
By practicing the principles of self-help, self-responsibility, democracy, equality, and solidarity, cooperative credit unions foster a sense of community and cooperation among their members. They prioritize the financial well-being and needs of their members over maximizing profits, and any surplus generated by the credit union is usually reinvested back into the institution or distributed among the members in the form of patronage dividends.
Cooperative credit unions play an important role in promoting financial inclusion, as they often serve communities or individuals that may have limited access to traditional banking services.
