taking membership

Birth of the Credit Union
When someone tells you they bank with a credit
union, you may automatically think of a financial
institution dedicated to only serving members
of labor unions. This is not the case.
Credit unions have nothing to do with specific
unions. Good news for us all, eh?
As far back as the mid-1800s, people found that they
could achieve a better standard of living for themselves
and others by pooling their savings and also by
making loans to neighbors and co-workers. The earliest
organization upon which the principles of today’s
credit unions are based was in 1844 in Rochdale,
England when weavers and workers created a democratic
consumer cooperative designed to help one
another. And the very first credit union was born.
Five years later, an attorney in Germany created a
credit society to help shopkeepers and urban workers
find relief from loan sharks. Friedrich Raiffeisen is
considered the German founder of credit cooperatives
and in the late 1800s, farmers formed credit unions to
lend each other money through financial co-op. They
realized that looking after their neighbor helped
everyone involved.
Edward A. Filene, a wealthy merchant is considered
the “father of U.S. credit unions.” In 1921 he partnered
with Roy Bergengren to organize the Credit
Union National Extension Bureau, an organization
designed to establish credit unions and credit union
laws. In 1934, FDR signed the Federal Credit Union
Act, establishing the Credit Union National
Association, a service organization that provided
insurance, auditing and supplies to credit unions. As
with most good ideas, the good ones go a long way.
Deregulation of the financial services industry in the
1980s led to new product offerings including checking
accounts, IRAs and removal of the rate ceiling on savings
accounts. Additionally, employee groups could
join a credit union as long as members in each group
shared a common bond such as manufacturing, hightech,
education, etc. In 1998, President Clinton signed
the Credit Union Membership Access Act into law,
which allowed federal credit unions to add select
employee groups with 3,000 or less employee/members
even if they don’t have a relationship with a credit
union’s original sponsor.
To learn more about credit unions, read our cover
story in this issue, NJFCU: 75 Years of Serving its
Members.
Our Fictional Character
Profile of an NJFCU Customer
Tiffany Jones was a very busy high school student. She
studied hard, played hard and at 16, even found time to take
a part-time job as a receptionist. Her mother Janet, a dedicated
18-year employee at North Jersey Federal Credit Union,
suggested “Tiff, now that you are going to be making your
own money, how ‘bout coming with me to NJFCU and opening
your own savings and checking accounts?”
“I guess I could,” replied Tiffany, “but I don’t want to save every
penny. You know how I like to shop.” Her mom cringed, but gave her
daughter the benefit of the doubt. “That’s the point…but by depositing
say, 70% of each paycheck you will be able to accumulate a bit of
savings so you have something to show for your hard work, but you’ll
also have some spending money.” By the time Tiffany turned 18 and
started college at The Ohio State University, she had a substantial nest
egg to help defray school expenses.
Although Tiffany chose an out-of-state school, she was able to bank
with her North Jersey account through the shared branch network. All
she had to do was log onto NJFCU.org and enter her zip code to learn
where the closest fee-free ATM or shared branch was located. With
the shared branch network as well as online and mobile services, she
was able to stay connected to the credit union and her finances.
Following her sophomore year, Janet told her daughter, “Your father
and I feel that it makes sense to explore a student loan to help with
expenses for the last two years of school. Let’s see if the credit union
can help us.” Tiffany and Janet met with James, the branch manager
who offered excellent student loan rates. Tiffany also asked about
auto loans, direct deposit services and the possibility of signing up for
a credit card so that she could begin to establish a good credit history.
James talked with Tiffany and together they developed a realistic plan
to help her start building a credit history by wisely using her credit
card.
Tiffany’s parents flew out to Ohio State for their daughter’s graduation
and were pleased to celebrate both her scholarship excellence and
the way she had learned to handle her money. “It was pretty easy,”
explained Tiffany. “Every time I had a question, I knew I could communicate
with James at North Jersey. He knew my accounts and my circumstances
and I felt very secure asking him about my finances.”
Tiffany earned her Bachelor’s degree in Economics and now works at
a large marketing firm in New York City that specializes in financial
clients. She still feeds her NJFCU savings account and smiles when
she checks her account balance. “I almost feel like a big-wig,” says
Tiffany “because I know that I can count on James and the others to
help me with issues down the road. I’m thinking about a car loan, a
mortgage, investments and even (someday!) a college loan for my
own children. First of course, I have to find Mr. Right. I think that is
going to take a while.”
Page 10 Business Matters