History of Credit Unions

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The idea behind credit unions first came from Germany during the mid 19th century, and by the late 1800s they had spread across Europe.

The earliest credit unions were inspired by the success that cooperatives had had in some of the other sectors like agricultural marketing and retail. In fact, the name “credit” is somewhat of a misnomer since even the very early credit unions typically offered savings as well as credit services. They also often offered other services like insurance and payments.

The Spread Of Credit Unions Across Europe

Although credit unions were first formed in Germany, they spread rapidly around the rest of the European continent. The first credit union was formed in Belgium in 1864, in Italy in 1865 and in England in 1872. England’s Co-operative Wholesale Society eventually became the Co-operative Bank and it is still in operation today. By the 1890s there were also credit unions in the Balkans, the Netherlands, Hungary, Switzerland and Austria as well as British India’s Baroda state.

Credit Unions Move To North America

North America’s first credit union was formed in Canada, in Quebec province in 1901. It required a deposit of 10 cents after its founder was moved to action after hearing about a man in Montreal who had received a court order which required him to pay almost $5000 of interest on his moneylender loan of just $150. The Canadian credit union was based on the European model.

In the USA, the first credit union was formed in New Hampshire in 1908. The founder of the Canadian credit union personally visited the state to help set up the St Mary’s Cooperative Credit Association with a group of French-speaking immigrants from Canada.

Unlike the majority of earlier credit unions, those in the USA were primarily based on employer bonds of association, with members sharing a workplace. This allowed the credit unions to make use of their members’ future pay checks as a form of collateral on loans.

Modern Credit Unions

Today, credit unions are still in existence and are very similar in many ways to their original counterparts. In the UK, credit unions in their modern incarnation were set up during the 1960s and since that time have been offering an ever-wider array of services to members including insurance, loans, current accounts, saving accounts, standing orders and payroll deductions. Although credit unions today do not have widespread recognition amongst members of the public, they are still offering beneficial services to all levels of society, and especially for those who struggle to obtain other forms of credit due to a poor or non-existent credit history.

Modern credit unions now offer many of the facilities and much of the functionality that banks can provide, with the larger organisations having access to ATM facilities, websites and even the opportunity to use online and mobile banking. This will serve to encourage younger people to become members and to continue to take advantage of the services that credit unions provide into the future.