Credit unions have general characteristics of commercial banks. These institutions also provide their customers with the same banking services and access to credit as any other bank.
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The big difference between the two institutions is that the cooperatives have their “own owners” as clients. Thus, at least 51% of the cooperative must belong to its members. Thus, every member, who can be understood as a partner of the financial institution, joins voluntarily and has the right to vote. For entry, a share capital of the future partner is required, usually of low value, which can be redeemed in the event of exit.
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A cooperative must be non-profit, the remaining acquired resource existing in each financial year become the agenda of a general meeting, in which the members decide what will be their destination. This resource is distributed among the partners in proportion to the financial transactions that each one carried out.
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Because they are not profit-oriented, credit unions often end up offering lower rates than traditional commercial banks. Cooperative services are generally personalized, with greater emphasis on rural credit or credit for small and medium-sized companies, for example.
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