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HomeMy WebLinkAboutThe Exeter Times-Advocate, 1973-06-28, Page 46REAL N gN... FORMED IN EXETER IN 1953 GENERAL What is a credit union? A credit union is a group of people with a common bond, who save their money together, and from this pool of savings make low-cost loans to one another. What do you mean by "a common bond"? Examples of a common bond are: working for the same employers, living in the same community, attending the same church, having the same profession, or belonging to the same union, lodge, or other association, Who started the first credit unions? Friedrich Wilhelm Raiffeisen started a credit society in 1849 in southern Germany to help the peasants in a time of severe famine, in 1864, he organized the first credit union of the type we have today. The idea spread to other countries, and in 1900, Alphonse Desjardins, a Quebec legislative reporter, organized North America's first credit union at Levis, Quebec. Desjardins also helped to found the first U.S. credit union, and worked with Edward A. Filen°, the Boston merchant, who contributed so much to the spread of the credit union movement in America. How does a credit union, differ from a bank? A credit union serves only its members; it may not accept savings from or make loans to the general public as a bank does. A credit union is owned and operated by its members, while a bank is owned by its shareholders. Does a credit union need a license to operate? A credit union must have a charter from the provincial government. How many persons are necessary to start a credit un- ion? A potential membership of at least 200 people is general- ly required. Is an entry fee charged? Usually a fee of 2.5c payable with the application. Is the Credit Union Movement connected with any particular religious or political group? No. Membership is open to eligible persons regardless of race, colour, creed or political belief. SAVINGS How does a credit union promote thrift? By encouraging its members to save regularly, even in small amounts, as payments of shares or deposits in the credit union. What is a share? A credit union- share, usually valued at $5, is simply savings accumulated in the credit union. The term "share" is used t'o indicate the unit of savings upon which dividends may be paid. How are dividends declared? Generally, the members declare dividends on fully paid shares at each annual meeting, based on recommendations of the Board of Directors. Are withdrawals permitted? Yes. A member may withdraw savings any day the credit union is open for business. Do members receive passbooks? Yes, although in many cases credit unions use special quarterly or monthly statements instead. Are credit union savings insured? Yes. The life of an insurable membei may be insured in an amount equal to his or her savings to a maximum of $2,000 up to age 55. Savings accumulated between 55 and 70 are insured on a percentage basis. The premium for this in- surance is paid by the credit union, and coverage continues in effect as long as savings remain in the credit union. On the death of a member, the insurance is added to his or her savings. LOANS How does a credit union provide credit? By loaning money to its members, for provident or productive purposes. 1 What is meant by a "provident or productive purpose"? Any purpose that will benefit the borrower. Is there any restriction on loans to members? The credit union sets the maximum amount which may be loaned to a member with or without security, within the limitations of the Credit Union By-Laws. Who approves loan applications? The Credit Committee who carefully-check the application outlining the purpose of the loan, the security offered and the terms of repayment. The Credit Unions Act provides for approval of small loans, and for loans up to the value of a member's savings, by the treasurer, or manager, subject to certain conditions. The Act now also provides for the hiring of a loan officer to lighten the burden of the credit com- mittee in larger credit unions. What does a credit union loan cost? The Credit Unions Act limits loan interest to 1% per month on the unpaid balance. This is equivalent to a rate of 12% per annum simple interest. However, if for example a loan of $1,000.00 is repaid in equal monthly instalments over a period of one year, the interest paid would be ap- proximately $65.00, or 6 1/2 % of the principal amount. Most credit unions charge the maximum rate of 1% per month, and many pay a rebate out of surplus at the year end, thus reducing the effective rate of 12% per annum. Credit union interest rates are lower than many other lending institutions and compare favourably with personal insured loans of the Chartered Banks. Are credit union loans insured? Yes. Through a contract between the credit union and the CUNA Mutual Insurance Society, loan balances of in- surable borrowers up to $10,000 may be protected in the event of death or permanent disability. CUNA Mutual also offers to members of league-affiliated credit unions in- dividual life insurance. OFFICERS Who operates the credit union? The member-owners operate it through the board of directors they elect at the annual meeting. The board may hire part or full time staff people, but continues to be responsible for directing their activities, and charting the policies and progress of the credit union. BECAUSE THEY OWN IT Drop in to the office any time and see how you can join your neighbors and friends in THEIR business. People like their Credit Union DISCOVER A BRIGHTER FUTURE WITH MEMBERSHIP IN Ervin Gingerich and Mrs. Don Fisher Section 2, Page 26 THE EXETER TIMES.ADVOCATE JUNE 28, 1973 Your CREDIT UNION EXETER COMMUNITY CREDIT UNION LTD. 430 MAIN STREET 235 0640