The history of the member-owned credit union goes back to mid-19th century Europe. The earliest credit unions formed around common bonds, general places of employment, or geographical location. The main purpose then, as now, was simple: give member-owners a place to save and borrow. Members put their money into a variety of savings and investment accounts. This money is then lent out to members, who pay interest.

Credit unions differ from traditional banks in many ways. As a member-owned entity, credit unions are not-for-profit. They function to serve their membership. As a result, credit unions are able to pay higher dividends on savings and charge lower interest rates on loans. After operating expenses and reserve requirements are met, the remaining income is returned to the members as dividends and other financial services. Moreover, the Credit Union Board of Directors is made up of unpaid volunteers. Directors are elected by the membership from among their own ranks.