Back in 1897, Alfred Desjardins was distressed when he heard about a Montreal man forced to pay $5,000 interest on a loan of $150. Ordinary folk wanting small loans were spurned by big banks and so turned to loan sharks. Desjardins, a former journalist with a keen interest in finances, decided to do something about it. Why not start a ‘co-operative savings’ society where citizens could extend loans to each other, using their collective savings for mutual benefit?
Desjardin’s vision took off. More than a century later, the Caisses Desjardins du Québec is the largest credit union in North America and the sixth largest financial institution in Canada, with more than 5.8 million members, $172 billion in assets, 42,600 employees and nearly $80 million ploughed back into community sponsorships, donations and bursaries.
According to the US Credit Union National Association, 54 per cent of credit unions increased membership in 2011.
No doubt about it – credit unions are booming in North America since the bank-fuelled financial crisis. In most cases, membership is based on belonging to a certain profession, sharing a common workplace, or being part of the same cultural or ethnic group.
A lot of the attraction is sparked by growing disgust with the big banks’ huge profits, cavalier service, bloated executive salaries and sky-high fees.
According to the US Credit Union National Association, 54 per cent of credit unions increased membership in 2011. After the Bank of America announced it would introduce a fivedollar debit-card purchase fee, credit union membership jumped by more than 650,000 (the Bank has since cancelled the fee).
In the US, credit unions help save money because they are non-profit. They often pay better interest rates on savings, and charge lower loan and credit-card rates.
Self-help, co-operative principles and a savings and loan system owned and administered by its members? Sounds like just the ticket. Bankers, take note.