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Credit Unions
What is a Credit Union?
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.
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.
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 usually charged at only 1% per month on the monthly reducing balance. 12.68% Annual Percentage Rate (APR). The interest charged on loans is the credit union's income.
Who can join a Credit Union?
The membership criteria of a credit union is called the 'Common Bond' -something that applies to every member. This often something like living or working in a particular area.
Credit Unions welcome everybody from within the Common Bond regardless of income, employment status or age.
For more information and to find a Credit Union in your area, please visit Association of British Credit Unions Ltd - www.abcul.org
Last Updated on Wednesday, 30 June 2010 12:36
