Credit unions
Credit Unions are not for profit, co-operative financial institutions. Members of Credit Unions are paid a yearly dividend on their investment although this cannot be guaranteed as it varies on the success of the Credit Union during the financial year.
Credit Unions also have to comply with the Credit Union Act 1979. They are regulated by the Financial Services Authority and audited annually.
Credit Unions are not just about borrowing money. All Credit Unions offer savings accounts. Deposit savings up to £50,000.00 are protected by the Financial Services Compensation scheme.
As well as savings Credit Unions also offer the added benefit of Life Insurance and Loan Protection Insurance (subject to conditions) at no extra cost to members.
The key to successful Credit Unions is not how much the members earn but their common sense of purpose. What do we mean by “common sense of purpose”? Credit Unions are community savings and loan co-operatives where members pool their savings to lend to one another and some members also volunteer to help run their Credit Union.
The objectives of a Credit Union are:
a) The promotion of thrift among the members of the society by the accumulation of their savings
b) The creation of sources of credit for the benefit of the members of the society at a fair and reasonable rate of interest
c) The use and control of the members’ savings for their mutual benefit
d) The training and education of the members in the wise use of money and in the management of their financial affairs.
Who can become a member?
It is a legal requirement of a Credit Union that their members have a common bond, this could be community based, associated base or employment based. Membership is open to anyone who fits within the limits of the common bond.
There is usually a small one-off membership fee to join a Credit Union and you can start saving from as little as £1.00 per week. No two Credit Unions are the same, they all offer unique products tailored to meet the needs of their members.
You are never too old or too young to join a Credit Union. Some Credit Unions offer savings accounts for the under 16’s (junior accounts), some offer Christmas and Holiday savings (where your money is locked away until Christmas or Holiday time).
In times of a crisis you may turn to a door step lender or even a loan shark for a small loan over a short period of time. Unfortunately the interest charged on this loan can be many times more than the amount borrowed, so you need to ask the question before borrowing any money “what is the total cost of the loan” for comparison purposes.
The total cost of the loan is the amount you have borrowed plus interest you will be charged over the re-payment period of the loan. If you have access to the internet you can use a comparison web site www.lenderscompared.org.uk to see where you may find the cheapest loan in your area.
A list of Credit Unions in the area