A credit union is a saving and lending co-operative, democratically owned and run by its members. It offers ethical and convenient savings and affordable loans facilities to its members. Any profits from the business are repaid to the members as a dividend.
The three main aims of a credit union are:
- To encourage its members to save regularly
- To provide loans to members at affordable 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 affordable loans
It currently offers free life savings and loan protection insurance
There are no hidden charges or fees
It is a member of the Financial Services Compensation Scheme so all savings are protected
It offers a way to learn new skills through volunteering.
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 local 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, DWP, housing providers, etc. Additionally there is strong cross-party and governmental support for credit unions.
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. Loans are granted to members on the basis of an individual’s assessed capacity to repay and are charged at a maximum of 2% per month on the reducing balance, which is a maximum annual percentage rate (APR) of 26.82 %.
All DWP and HMRC benefits can be paid directly into a credit union.
Who can join a credit union?
People who join a credit union must belong to what is called a "common bond". North Lincolnshire Credit Union’s common bond states that anyone who lives or works within North Lincolnshire can become a member.
Credit unions are non-discriminatory and welcome everybody from within the common bond as members 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 email@example.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, by payroll deduction, by standing order from your bank or building society or by having your DWP and/or HMRC benefits paid directly to a your credit union account.
Will I get interest on my savings?
As a credit union grows it may declare a dividend at the end of the financial year. However, small credit unions will be unlikely to be able to do this.
How soon and how much can I borrow from the credit union?
Most credit unions will accept loan applications from new members but the amount loaned will depend on a member’s income and assessed ability to repay. Members are also encouraged to save whilst repaying a loan.
Credit unions, as well as banks and building societies, must be authorised and regulated by the Financial Services Authority (FSA) and must submit quarterly returns and audited annual returns.
They are covered by the credit union act 1979.
They are independently audited
They are members of the Financial Services Compensation Scheme 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 and are governed by the Data Protection Act.
Are they insured?
A credit union is insured against fraud and theft.
They currently 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
Pop in: 162 High Street, Scunthorpe, North Lincolnshire, DN15 6EH