Credit unions were started in Germany, about 1849, by Frederick Raiffeisen, the mayor of a small town. He devised a credit society to help his townspeople help themselves. Until then, they had relied on the handouts or charity of the land barons who owned the lands that the families lived and worked on. Frederick Raiffeisen reasoned that people could save money together and make loans to each other at low rates. The borrower’s character would be the primary security for a loan. The idea spread throughout Europe and about 60 years later the idea came to the United States through Canada.
Edward Filene of Boston invited representatives of Canadian Credit Union system (known as Caisse Populaire), to explain the system to him and his colleagues. Shortly after, the first American Credit Union was organized at St. Mary’s church in New Hampshire. In 1934, the National Credit Union Administration was formed and the Credit Union Act was passed.
Credit unions are unique in that they serve a “common bond” group. They serve a specific group of people. Your credit union serves “the employees of Connecticut Transit and their families.” Most credit unions started out as parish credit unions or employee groups. Today, the common bonds can also be residential communities, such as the Enfield Community Credit Union; association memberships such as the French Social Circle FCU; as well as employee groups of different companies.
Credit Unions are also member owned and profits do not have to be made to satisfy private owners or stockholders. In other words, profits go back directly and indirectly to the members. Each shareholder in a credit union has a right to vote at the annual meeting and can volunteer to serve on the Board of Directors or on other committees.