Background BHCCU

So, what is a credit union?

A credit union is a group of people who join together to pool their savings and make loans to each other at reasonable rates of interest, with a sensible approach to fees and other account keeping charges.

In short, it’s a group of people who own their own financial institution.

A credit union uses deposits from members to fund loans to other members. Those members who deposit money are paid interest for the use of their money and this acts as an incentive for members to save even more. As members increase their savings, the pool of deposits expands, allowing the credit union to fund more loans.

Those members who borrow from the credit union pay interest for the use of the money. Interest on borrowings is the credit union’s main source of income and covers

  • the interest paid to savers
  • the credit union’s operating expenses
  • reserves for financial stability.

Once the expenses of a credit union are met, any additional income is returned to members in the form of extra benefits such as:

  • better interest rates on deposits
  • better interest rates on loans
  • lower fees and charges
  • enhanced member services eg. telephone banking, internet banking, BPAY®
  • retirement planning and superannuation.

There are many reasons why credit unions are different to other financial institutions, but the main difference is that you become a member when you join.

Credit unions are democratic, member-owned financial institutions with a total focus on the members they serve.

On joining a credit union, each member is asked to purchase a share for a nominal amount, usually between $2 and $10. (A Broken Hill Community Credit Union share is $10.00.) This share entitles the member to an equal say in the running of the credit union. The member has the right to vote at Annual General Meetings and when electing the Board of Directors. Members can also stand for positions on the Board.

Each member has one vote, regardless of the amount of business he or she has at the credit union. As a member you are treated with dignity and respect. After all, you own part of the credit union!