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Important Aspects of a Credit Cooperative A union with its members as the owners and government and offers financial services is known as a credit cooperative. Credit cooperatives originated from Germany and spread worldwide as evidenced currently. Credit unions intend to encourage saving, give loans at favorable charges and provide other monetary assistance to its members. Loan facilities and other financial help are offered to members at a lower rate of interest from the combined savings of the members. The intentions of a credit cooperative are not to make a profit. To identify a credit union, look at the following things. There should be a clear guidance on how one becomes a member of the credit union. People with similar goals agree to start and operate a credit union and to become a member, one subscribes by paying a membership fee and accepts the outlined terms and conditions of the union. Joining fee is paid to enroll as a member and following rules and regulations is mandatory. Foundation of a credit cooperative may result from the places where individuals stay, where they work and other interrelationships among others. Regular saving of member’s money is done by following a specific channel. The owner is entitled to using the services of the credit union and a member can withdraw his savings when exiting the union. You should know the goals of the credit cooperative and what it wants to achieve. The primary purpose of any credit union is to encourage members to save money. From the pool of money saved by the many members, it offers loans to its members.
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One of the main purposes of credit cooperatives is to lend money to its members at a lower fee as stated above. Since the intention is to improve the economic lives of the members, the credit unions charge a lower interest rate on its credit facilities. They offer emergency loans, ordinary loans, and special loans. They charge less fee than banks and other micro-finance.
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The members benefit from the money they have saved from the commissions they get. Arguments may arise from unclear stipulations. A Clear stipulation should be made when it comes to how the earnings will be shared to avoid conflicts. It is important to know the criteria used to elect the board of directors. Owners, who are the members of the credit union, have the right to elect its board of directors because they are the shareholders of the cooperative. The board of directors offer free services on a voluntary basis but employ professionals to do the daily tasks of the union. Lastly, credit unions hold an annual general meeting for accountability and to know the state of the credit cooperative. Credit unions are different from other financial organizations like banks and micro-finance and offer greater financial assistance to its members.