A credit union is a cooperative financial institution that is owned and controlled by its members, and operated for the purpose of promoting thrift, providing credit at reasonable rates, and providing other financial services to its members.  Many credit unions exist to further community development or sustainable international development on a local level. Worldwide, credit union systems vary significantly in terms of total system assets and average institution asset size since credit unions exist in a wide range of sizes, ranging from volunteer operations with a handful of members to institutions with several billion dollars in assets and hundreds of thousands of members. Credit unions nonetheless remain typically smaller than banks with, for example, the average U.S. credit union having $93 million in assets versus $1.53 billion in assets for the average U.S. bank, as of 2007.

The World Council of Credit Unions (WOCCU) defines credit unions as "not-for-profit cooperative institutions."  In practice however, legal arrangements vary by jurisdiction. For example in Canada credit unions are regulated as for-profit institutions, and view their mandate as earning a reasonable profit to enhance services to members and ensure stable growth. This difference in viewpoints reflects credit unions' unusual organizational structure, which attempts to solve the principal-agent problem by ensuring that the owners and the users of the institution are the same people. In any case, credit unions generally cannot accept donations and must be able to prosper in a competitive market economy.

Credit unions differ from banks and other financial institutions in that the members who have accounts in the credit union are the owners of the credit union and they elect their board of directors in a democratic one person-one vote system regardless of the amount of money invested in the credit union.  A credit union's policies governing interest rates and other matters are set by a volunteer Board of Directors elected by and from the membership itself.  Credit unions offer many of the same financial services as banks, often using a different terminology; common services include: share accounts (savings accounts), share draft (checking) accounts, credit and debit cards, share term certificates (certificates of deposit), merchant services, online and mobile banking.  Normally, only a member of a credit union may deposit money with the credit union, or borrow money from it.  As such, credit unions have historically marketed themselves as providing superior member service and being committed to helping members improve their financial health. In the microfinance context, credit unions provide a broader range of loan and savings products at a much cheaper cost [to their members] than do most microfinance institutions.

Credit unions are sometimes called by other names depending upon where the credit union is located; for example, credit unions are called "Savings and Credit Cooperative Organizations" ("SACCOs") in many African countries "to emphasize savings before credit."  Credit unions are often called "cooperativas de ahorro y crédito" in Spanish-speaking countries, but in Mexico a credit union is typically called a "caja popular."  French terms for "credit union" include "caisse populaire" and "banque populaire."  Afghani credit unions "are called Islamic investment and finance cooperatives (IIFCs) to comply with Islamic lending practices."

Based on data from the World Council of Credit Unions, at the end of 2006 there were 46,377 credit unions in 97 countries around the world. Collectively they served 172 million members and oversaw $1.1 trillion USD in assets.

According to the World Council, the nation with the greatest number of credit union members is the United States with more than 86 million, that’s more than one in three working Americans.

Modern credit union history dates to 1852, when Franz Hermann Schulze-Delitzsch consolidated the learning from two pilot projects, one in Eilenburg and the other in Delitzsch in Germany into what are generally recognized as the first credit unions in the world. He went on to develop a highly successful urban credit union system.

The first credit union in North America, the Caisse populaire de Lévis in Quebec, Canada, began operations on January 23rd, 1901 with a ten cent deposit. Founder Alphonse Desjardins, a reporter in the Canadian parliament, was moved to take up his mission in 1897 when he learned of a Montrealer who had been ordered by the court to pay nearly $5,000 in interest on a loan of $150 from a moneylender. Drawing extensively on European precedents, Desjardins developed a unique parish-based model for Quebec: the caisse populaire.

In the United States, St. Mary's Bank Credit Union of Manchester, New Hampshire holds the distinction as the first credit union. Assisted by a personal visit from Desjardins, St. Mary's was founded by French-speaking immigrants to Manchester from Quebec on November 24, 1908. America's Credit Union Museum now occupies the location of the home from which St. Mary's Bank Credit Union first operated.

In 1934 Congress passed the Federal Credit Union Act, which permitted credit unions to be organized anywhere in the United States. The legislation allowed credit unions to incorporate under either state or federal law, a system of dual chartering that persists today.

In the credit union context, the term "not-for-profit" should not be confused with "non-profit" charities or similar organizations.  Credit unions are "not-for-profit" because they operate to serve their members rather than to maximize profits.  Credit unions are not charities or similar organizations that rely on donations; to the contrary, credit unions are financial institutions that must turn what is, in economic terms, a small profit (i.e. "surplus") to be able to continue to serve their members.  According to WOCCU, a credit union's revenues (from loans and investments) do need to exceed its operating expenses and dividends (interest paid on deposits) in order to maintain capital and solvency and "credit unions use excess earnings to offer members more affordable loans, a higher return on savings, lower fees or new products and services."
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