A Credit Union is a profit sharing, democratically run financial
co-operative which offers convenient savings and low interest loans
to its members. The members own and manage their credit union
themselves.
The three main aims of a Credit Union are:
- to encourage its members to save regularly
- to provide loans to members at very low rates of interest
- to provide members with help and support on managing their
financial affairs (if required).
What are the benefits of a Credit Union?
- it is an easy and convenient way to save and borrow.
- it offers very low cost loans.
- insurance at no direct cost.
- it's a way to learn new skills.
Credit unions can provide a focal point for a community by bringing
people together, to work alongside each other for their own benefit
and the benefit of the community as a whole with organised events,
family fun days, quizzes, etc.
A credit union can help to revive the local economy by keeping
money in the community. Loans to Members can mean income for local
shops and businesses.
Who supports Credit Unions?
Churches, Community Groups, National Consumer Councils, Citizens
Advice Bureau, Trading Standards, Police, Fire, Taxi Drivers, Local
Authorities, etc.
How do they work?
The members make regular savings, as little or as
much as they wish. These savings then form a common pool of money
from which loans are made to members. When members have been saving
for a certain period of time (usually about 12 weeks) they can
apply for a loan from the pool. Interest on the loan is charged at
only 1% per month on the monthly reducing balance. 12.68% Annual
Percentage Rate (APR).
Who can join a Credit Union?
People who join a Credit Union must belong to what is called a
"Common Bond". This could be that you reside in a specified area,
or you work for a particular employer or that you are a member of a
club or association.
Credit Unions welcome everybody from within the Common Bond
regardless of income, employment status or age.
How do you join a Credit Union?
If you wish to join a Credit Union but are unable
to visit in person, the Council will arrange for a representative
of the Credit Union Office to contact you. Please use the contact
details at the bottom of the page for further information.
How much do I have to save?
Whatever you can afford - £5 a week, £1 a week, 50p
a week. The only requirement is that you save regularly.
Will I get interest on my savings?
As a Credit Union grows it may declare a dividend at the end of the
financial year. It can pay a dividend of up to 8% a year, although
it will be unlikely to be able to afford as much as this during the
first few years.
How soon and how much can I borrow from the Credit
Union?
Most credit unions expect you to save regularly for
about 12 weeks before allowing a loan and any loan will be related
to your savings in some way.
The amount you will be able to borrow will depend on how much you
need, what you can afford to repay, and the credit union's
policies. In the early days the credit union will allow small
loans, becoming bigger as the credit union gets bigger.
Security
- Credit Unions have to be registered with the Financial Services
Authority (FSA).
- They are covered by the Credit Union Act 1979.
- They are independently audited.
- They are regularly monitored by the FSA.
- Your business is private in the credit union because all
members and Officers who have access to personal information must
act in a confidential manner at all times.
Are they Insured?
- They are insured against fraud and theft.
- They provide life and loan protection insurance at no direct
cost to the member payable to a nominated beneficiary.
- The life savings insurance means that if you die, your
beneficiary can receive up to twice the value of your shares.
- The loan protection insurance covers the amount of your loan
outstanding.
Where do Credit Unions exist?
In most of the world, credit unions are well established. Starting
in Germany 150 years ago they spread throughout Europe, to North
America, Canada, Asia and to Ireland. One third of the adults in
Ireland are members of a credit union. Credit unions are steadily
increasing throughout the UK both in communities and the work place
(eg. Police Force, British Airways, Fire Service, local authority
employees etc.).
Other Credit Union Sites
For further information regarding Credit Unions please telephone
01502
523186