Credit Union in the Philippines

What is credit union?

 A credit union is a not-for-profit financial institution that exists to serve its

members.
 Credit union provide products and services to people who share something in
common, such as where they work or live, or even their nationality.
 The democratic nature of credit union allows all members to have an equal voice
in the operation of the organization regardless of the amount of money each
person has on deposit.
 When a person joins a credit union, they are considered a member because they
are one of the owners and shareholders of the institution.

History of Credit Union

 Credit unions are not-for-profit financial cooperatives. In the early stages of

development of a nation’s financial system, unserved and understand
populations must rely on risky and expensive informal financial services from
sources like money lenders.
 Credit unions proved they could meet demand for financial services that banks
could not: from professional, middle class and poorer people. Those that served
poorer urban and rural communities become an important source of
microfinance.
 The first working credit union models sprang up in Germany in the 1850s and
1860s, and by the end of the 19th Century had taken root in much of Europe.
They drew inspiration from cooperative successes in other sectors, such as retail
and agricultural marketing.
 Credit union are not-for-profit financial institutions that exist to provide
exemplary service to consumers – which they call members – because a credit
union’s customers actually OWN the institution where they bank.
 Credit unions exist to serve members, not profit from them. All of a credit
union’s profits are returned to members in the form of fewer fees, lower rates
on loans and higher rates on savings. Credit union membership offers numerous
benefits, including access to a variety of services like simple savings, home equity
loans, IRAs and more.

Credit Union, Thrift Savings and Loan Association in the Philippines

 Credit unions (CUs) are internationally understood as Thrift, Savings, and Loan
Associations.
 CUs have a somewhat developed a second name as Credit Co-operatives.
  Uniquely and unusually in the Philippines, there are no more CUs but only Credit
Co-ops. Also, in the Philippines, credit is synonymously if not misunderstood as
loan, debt, or “utang” rather than thrust.
 In the Philippines in the early 1970s especially after the declaration of Martial
Law that was understood to be running after the many communists movements
and their considered various fronts including various Labor Unions, Credit Unions
then “sounded” or “misunderstood” like the labor unions: and so CUs were
somewhat considered communist fronts if not communists organizations as
many CU or co-operative leaders were arrested and placed in jails if not
concentration camps: and many could still be missing until today.er than “trust”.
 To somewhat further degenerate credit co-operatives or CUs into ordinary
Lending services or institutions, co-operatives are now employing “collectors”
with the titles like “account officer”, etc. that only promote practices of usual
and ordinary “lending institutions” (rather than the values of “thrift and savings”
of CUs) and many not be increasing co-op membership and much less of
“quality” co-op membership.
 While the Philippine Laws recognizes and encourage multi-purpose co-
operatives and many other types of co-ops (consumers, producers, marketing,
etc. and now subsidiaries) as proposed by pioneering co-op leaders in the early
1980s, co-op leaders appear to be contented and promoting only the CU type.
 Rather than expanding (membership involvements and benefits) on the
internationally accepted practices of CUs with credit committees, almost all co-
ops in the Philippines have abolished credit committees (by supporting a
contrary law provision under R.A. No. 9520 rather than on 6938 and 6939); and
worse, employing corporate style of internal auditors); etc.

What is the difference between credit unions and banks?

 Credit Unions are Not-for-profit cooperative

 Credit Unions return earnings to members in the form of lower loan rates, higher
savings rates, and free or low-cost services.
 Each person who deposits money into the credit union is a member with a share
of ownership.
 Credit unions are controlled by Board of Directors elected by members.
 Most credit union board members are volunteers.
 Credit unions are only allowed to serve a select group of individuals that have a
common bond such as where they work, live or even their religion.

How does everyone benefit from credit unions?

 Credit unions benefits consumers Credit unions create competition in the

financial services industry. When financial institutions are forced to compete
 with one another, they must work hard to provide quality services to
competitive rates.
 It is the top priority for credit unions to improve services for members, not to
increase profits for stockholders. When credit unions provide exceptional service
to members, they raise the bar for other financial institutions. Ultimately all
consumer benefit.
 Credit unions benefit communities. Credit unions have a history of giving back to
the communities they serve. Credit unions have repeatedly proved that their
philosophy of “people helping people” is an everyday way of doing business.
 All around the state credit unions are working to provide communities the
services and resources they need.
 Credit unions are also actively involved in reaching out to underserved areas and
providing services to those who are not traditionally served by financial
institutions.
 By teaching citizens how to properly build, maintain and use credit wisely, credit
unions are giving them the tools they need to achieve financial success and
further contribute to the local economy.
 Credit unions are best identified by their adherence to cooperative principles,
especially related to membership and control.
 Many organizations of credit unions were started by and/or controlled by
governments in the developing world, and were described as ‘credit unions’ or
‘cooperatives’ by their promoters. However, government control, whether in a
capitalist or communist political context, represents a fundamental repudiation
of cooperative principles.

Advantages of Credit Union:

 Credit Unions Put Customers First
When you open an account with a credit union, you become a member of the credit union.
The credit union works please its members or shareholders, and not stockholders.

 Lower Fees
One of the places banks make money is in the fees. The fees associated with a credit union
tend to be lower than that of a bank. Transfer fees are lower, and usually there are no ATM
fees charged by the credit union. The overdraft policies are better, since overdraft fees tend
to be a big money maker for banks.

 Better Interest Rates.

Credit unions offer higher savings rates and lower interest rates on loans. Since they are not
focused on making a profit, but instead just want to cover operating costs they pass on the
better interest rates to their customers.
  Willing to Work With You
A credit union may be more willing to work with you if you have bad or poor credit or have
difficulty qualifying for a loan.

 Qualifying to Join
Credit unions have rules regarding who can join them. These rules may be living in a specific
geographical region, working at a specific employer or going to school.

Disadvatage:
 They offer limited branch locations and ATMs.
Many credit unions operate only in one location. Although the smaller, community-based
focus is what attracts

 Fewer services and options are available.

Credit unions have come a long way in matching big bank services but not all can.

 Fewer services and options are available. Credit unions have come a long way in
matching big bank services but not all can

 Credit unions aren’t as tech-savvy as big banks. Commercial banks have much larger
assets than credit unions, which might not have enough money to fund new technology.