If you're seeking to borrow some cash to pay for a dream vacation, buy a car or make any improvements for your property, it is very likely you first withdraw money or take a loan from the bank.
Credit Unions work by having members pool their savings together, which can then provide a fund from which loans are made to other members.
Borrowers then pay interest on the money loaned to them as they would if the loan had been through a bank. You can get nearby credit union services through the internet.
As the money in the fund belongs to individuals, the credit union 'rents' the funds from its savers, who each year receive a dividend from the money they rent to the credit union.
As a result, credit unions should offer its savers a good return on the money that is placed in the fund.
In order to operate, a credit union must be successful in attracting a sufficiently large amount of savers to enable it to hold sufficient liquidity to enable it to meet members' requests for loans, share withdrawals, and overheads.
Furthermore, dividend payments to savers and the credit union's operating costs have to be met out of the credit union's profits, so a strong fund is essential for the credit union's success.
As the main source of income for a credit union comes from the interest charged on members' loans. It is very important that the credit union be proactive in marketing the benefits and availability of their services.