A credit union is a profit sharing, democratically run financial co-operative. It 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
- No hidden charges or fees
- Security and protection.
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.
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 (CAB), trading standards, police, fire, taxi drivers, local councils, mainstream banks etc.
How do they work?
The members make regular savings. This can be 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 cent per month on the monthly reducing balance. 12.68 per cent 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". North Lincolnshire's credit union common bond states that anyone who lives or works within North Lincolnshire can become a member.
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 you can call into the shop at 162 High Street Scunthorpe.
If you are unable to visit in person, arrangements can be made for a representative of the credit union office to contact you.
Tel: 01724 868888 or email north.lincs.cu@btconnect.com.
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.
Deposits can be made at a collection point within 162 High Street, Scunthorpe, or by standing order from your bank or building society.
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 per cent a year, although a new credit union will be unlikely 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.
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, which gives the same protection as that offered to bank and building society customers.
Your business is private because all credit union members and officers who have access to personal information must act in a confidential manner at all times.
Are they insured?
A credit union is 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.
For more information:
Phone: 01724 868888
Email: north.lincs.cu@btconnect.com.
Pop in: 162 High Street, Scunthorpe
Other credit union and relevant sites: