What is a Credit Union?
A Credit Union is a financial co-operative organized, for the sole purpose of providing service to members.
What is the Difference between a Credit Union and a Bank?
There are several differences between a Credit Union and a Bank. These differences are summarized below:
- Credit Unions are different from Commercial banks in structure. Banks and other financial institutions are owned by stockholders or shareholders who seek to profit from their investment in the organization. Credit Unions are owned co-operatively and democratically controlled by all of their members without regard to the amount of money that a member has in their Credit Union.
- Credit Unions are directed by a Board which is a group of volunteers selected from within the membership.
- Credit Unions return profits to their members in the form of dividends, competitive loan rates and services.
- Credit unions only do business with their members.
Who Regulates Credit Unions?
Currently credit unions are regulated by the Department of Co-operatives & Friendly Societies (DCFS) on behalf of the Government of Jamaica. In the near future, credit unions will be regulated by the Bank of Jamaica (BoJ). The Jamaica Co-operative Credit Union League (JCCUL), the national association for credit unions, also has a self-regulatory mechanism in place for credit unions.
How Does a Credit Union Operate?
A credit union accepts deposits from its members and offers to them a range of financial services. Members elect a board of directors at their Annual General Meeting (AGM). The board in turn employs a General Manager to manage the day-to-day operations of the credit union. The General Manager reports directly to the Treasurer of the Board of Directors. Credit Union members are elected to serve on various committees in the Credit Union, these include: the supervisory committee, the finance committee and the credit committee.
There are several benefits to being a member of a Credit Union. These benefits are summarized below:
- A credit union member is a co-owner of the credit union.
- Each member has equal voting power, (one vote), the same as all other members in the credit union irrespective of the amount of money held in savings.
- Each member has the power to exercise his/her democratic right in determining by whom and how the credit union is run.
- A credit union member shares in any annual surplus.
- Credit unions now offer a range of financial services, in some instances the same as those available in other financial institutions.
- Members can determine the type of financial services the credit union should provide.
- Members are helped to save through the habit of thrift that is encouraged by credit unions.
- Members can save directly and transact business at their credit unions through salary deduction facilities.
- Life savings and loan protection insurance at no cost to members.
Does age matter when a person wants to join a credit union?
A person has to become 16 years of age to qualify for membership in a Credit Union. Some credit unions, however, offer membership at 18 years of age. Persons under 16 years of age can still save with the credit union through their Youth Savings plans.