Credit Unions
Credit unions are not-for-profit, cooperative organizations that are owned by their members. Their goal is to minimize the rate members pay on loans and maximize the rate paid to members on deposits. Whatever surplus is earned is retained to build the capital of the credit union. Members must share a common bond. That bond is typically employment (members all work for the same employers) or geography (members all live in the same geographic area). Historically, credit unions specialized in providing automobile and other personal loans and savings deposits for their members. However, more recently credit unions have offered mortgage loans, credit card loans, and some commercial loans in addition to checking accounts and time deposits.
Credit unions, SLAs, and savings banks help encourage thriftiness by paying interest to consumers who put their money in savings deposits. Consequently, credit unions, SLAs, and savings banks are often referred to as thrift institutions.
Of the various types of banks in the United States, commercial banks account for the greatest single source of the financial industry’s assets. In 2000 the 8,528 commercial banks in the United States controlled 24 percent of the financial industry’s total assets. Commercial banks, however, have seen their share of financial-industry assets erode over time, as more money has shifted to money market and other mutual funds. In the mid-1990s, for example, the approximately 11,000 commercial banks then in existence controlled 27 percent of assets. In 1950 they controlled nearly 50 percent of financial assets. Savings institutions’ share of financial assets has also dropped from roughly 13 percent in 1950 to 5 percent in 2000. Credit unions’ share has remained fairly constant at 2 percent.
Credit unions, SLAs, and savings banks help encourage thriftiness by paying interest to consumers who put their money in savings deposits. Consequently, credit unions, SLAs, and savings banks are often referred to as thrift institutions.
Of the various types of banks in the United States, commercial banks account for the greatest single source of the financial industry’s assets. In 2000 the 8,528 commercial banks in the United States controlled 24 percent of the financial industry’s total assets. Commercial banks, however, have seen their share of financial-industry assets erode over time, as more money has shifted to money market and other mutual funds. In the mid-1990s, for example, the approximately 11,000 commercial banks then in existence controlled 27 percent of assets. In 1950 they controlled nearly 50 percent of financial assets. Savings institutions’ share of financial assets has also dropped from roughly 13 percent in 1950 to 5 percent in 2000. Credit unions’ share has remained fairly constant at 2 percent.