Credit Unions (local banks owned and run by you!)
Credit unions are one of the most wonderful ways to support local communities, and help people in financial difficulties. Yet strangely, not many people make use of them. And some have even had to close down, due to lack of use.
So what are credit unions? In short, they are local banks run by local people. They are quite complicated and time-consuming to set up. But the good news is that nearly every town and village (and of course city) in England has one. So you just pop along (usually with a £1 joining fee and two forms of ID) to join.
Credit unions are usually manned by volunteers in schools, and community shops. Larger ones in cities often have their own offices, and a few even offer business accounts and mortgages.
If you are homeless, you can usually use a hostel address, if you don’t have a registered address.
Enter your postcode to find your local credit union
Most credit unions work on a ‘common bond’ (usually by area but occasionally by professional or religion):
If you are already in debt, you can by law switch to a credit union, and then usually pay off your debt with a bank at the same time. Or in some cases, you can transfer your debt over to a credit union, and pay it off at lower rates. Get free help from StepChange debt charity.
What Makes Credit Unions Different?
Unlike banks, credit unions don’t pay interest. But instead they offer dividends, so the more you save, the more you get back (in today’s low-interest world, this sometimes works out more than with banks).
Unlike private banks, credit unions are non-profit, and encourage people to save. Your money is then loaned at fair rates to local businesses, but nobody can borrow money unless they have a few months’ worth of saving.
And if you do take out a loan, the rate is set by law. For instance, taking out a £500 loan would result in an interest of around £30 to £50 a year (compare that to the big banks).
Also unlike banks, money is kept within the community, not invested in polluting energy, animal testing, weapons etc.
Some credit unions also offer junior accounts for children, and a few even offer tax-free ISA accounts.
Credit unions are hugely popular in Ireland, so why not here? It’s a mystery!
