Credit Unions

Credit unions are not just for those struggling to qualify for high street borrowing. As community co-operatives, they can also appeal to those who want to benefit their neighbours. Savings rates are extremely low, credit unions can sometimes beat high street rates. Credit unions are small non-profit financial organisations set up by members with something in common to benefit their community. That common factor may be living in the same town, working in the same industry or belonging to a particular trade union.

 Most now offer current accounts, and a few even offer mortgages.  They’re there to provide a financial community, where its members mutually benefit as there’s no profit for third party shareholders. This can mean helping those who can’t get access to ordinary bank products; a lifeline for less well-off communities for folks grappling with their finances. Plus, they can be a welcome alternative to pay-day loans or doorstep lending. Yet, they're not just for those struggling financially. They also appeal to those who want to bank ethically and benefit their community.

Credit unions aim to help you take control of your money by encouraging you to save what you can, and borrow only what you can afford to repay. In essence, they're savings and loan co-operatives, where the members pool their savings to lend to one another and help to run the credit union.

This is done in a ‘not-for-profit’ way, so the cash is only used to run the services and reward the members. Throughout the year, those running credit unions must put aside enough money to ensure they don’t go bust money that’s left over is channelled back to those who have a savings account or it is used to try and improve the overall service.

Products on offer included are loans: most credit unions come into their own for loans of smaller amounts, under £3,000. Many people who borrow these amounts would otherwise only be able to resort to doorstep lending or payday loans as an alternative. You can also use the loan to buy white goods via Co-operative Electrical. Another way to buy electrical is via the Smarterbuys scheme. This is a collective buying project that allows you to pay for goods by Paypoint, or a credit union loan, as a way to avoid payday loans, weekly payment stores or loan sharks.

It's not just about the products one of the main objectives of a credit union is: "The training and education of the members in the wise use of money and in the management of their financial affairs." A key appeal of credit unions is a willingness to make small loans of £50 to £3,000, which most high-street banks won’t do.