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A credit union is a co-operative financial institution that is owned, controlled and administered by its members. Only a member of a credit union may deposit money with the credit union, or borrow money from it. The character of a borrower is often deemed to be the most important security for his/her loan.
A credit union differs from a bank in that it typically may pay higher interest on deposits, may charge lower interest on loans, and the members who have accounts in the credit union are its owners. Credit unions offer many of the same services as a bank, including share accounts (savings accounts), share draft (checking) accounts, and credit cards.
Since a credit union is a co-operative institution, its policies governing interest rates and other matters are set to reflect the interests of the membership as a whole.
Generally, credit unions are required to restrict their membership to a certain segment of the population, such as employees of a certain company, a specific occupational group (many credit unions have educators as their core group), or people who live in a certain well-defined area.
Canada is the country with the highest per capita use of credit unions, with over a third of the population enrolled in one. They are concentrated in Quebec, where they are known as caisse populaire, and on the western prairies.
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