For the purposes of this text we have defined a credit union to be a group of people who have cooperatively and democratically organized a resource that provides a varied range of financial services to benefit all members of the group. It’s difficult to determine precisely when and where this "cooperative banking" concept originated, however most believe it was developed from a need that a lower class of people had for financial services, but were unable to obtain these services through traditional sources. It wasn’t until the 1800’s when co-operative banking reached Europe and finally in the 1900’s credit unions had found their way to North America.

By definition a credit union is a group of people. An existing common bond that determines the credit union’s field of membership usually identifies this group. Historically this common bond might have been the group’s place of employment, place of worship, residential area, trade or some other unique trait. In order to stay competitive in the financial markets, during the past two decades credit unions have found it necessary to expand their field of memberships to include a wider number of consumers. As a result, a credit union's field of membership may be defined one of three ways, by a single-sponsor, a multi-group sponsorship or by community. A single-sponsor, the least common of the three, allows membership eligibility when some one is employed by the single sponsor organization. The multi-group sponsorship is also known today as SEG’s or small employee groups. A credit union with a multi-group field of membership will allow member eligibility if anyone is employed at any of the companies defined by the credit union field of membership. While there are no limits on the number of companies that comprise a credit union's field of membership, typically the number could range from 50-500 different companies. The final way to define a credit union's field of membership is through a specific community. A community may be a particular neighborhood(s), town(s), state(s) or nation(s).

Because credit unions have created a structure that is democratically controlled by its members, some governments around the world have come to recognize credit unions as tax-exempt or non-profit organizations. This distinction has afforded credit unions the opportunity to provide services more efficiently. Today, the myth about credit unions is that they are becoming more like banks because they are growing in assets, assessing fees to members, owning buildings with drive-up service and offering real estate loans. The fact is, credit unions are different from banks in one only aspect.  Credit unions are owned by all of its members and banks are owned by their stockholders. Each credit union member is given one vote through a democratic process that determines who will serve as its board of directors.