In a world that has suddenly gone into abrupt economic downturn, the thought of the banks coming after you for loans and mortgage payments, may fill you with dread. However, now more than ever, is the time when credit unions could come into their own. They have been around for years, yet some in recent years have even had to close down, as nobody used them. But now more than ever, we need them.
Credit unions are simply locally owned non-profit banks, set up by and run for the community. Your money is as safe as any other bank (according to government guidelines) and you just visit a branch (smaller towns have branches in local shops or schools) with £1 and a couple of ID documents (some allow homeless people to give hostel details). Then you are encouraged to save, and only get small affordable loans, when you have a history of saving. The rates are set by law, so say you borrowed £500, you may pay back £550 over a year (compare that to the banks). It keeps money and loans within the community, and they don’t come after you, with threatening letters.
Credit unions are run on a common bond, which is usually where you live. But there are also credit unions based on profession, religion or membership of an organisation (say the Police, NHS etc). Larger ones even offer mortgages, insurance and junior accounts. And if you are already in debt, some will let you transfer your money over, so your debt payments are far smaller. Also contact a debt charity, for free help.
Rather than interest, credit unions pay out dividends at the end of each year. Based on a percentage of what you invest. So the more you save, the more you get. Although low, the rates are likely better than bank interest, in many cases. Larger credit unions also offer pre-paid debit cards (which work in machines and in stores, but you can’t borrow money against them, that you don’t have). Some large credit unions even offer payroll dividends, where you can choose to have your salary paid direct into your account.
How to Join a Credit Union
Just enter your postcode to find your local credit unions. You can also use this website to find credit unions, based on profession or religion.
To read more about credit unions (and learn how to set one up), read Local Money: How to Make it Happen In Your Community. This is written by Peter North, who is involved in Transition Town Liverpool.
Michael’s Idea to Help
End the High Cost Credit Alliance is an organisation set up by Welsh actor Michael Sheen. At this site, you can find links to organisations that are engaged in finding alternatives to handing out loans to those who cannot afford them. The idea is to debate changes needed in business, politics and society to deliver healthy credit for all. The idea is to avoid people taking advantage of the vulnerable, in case someone in poverty needs money to mend a washing machine or boiler etc.
End Furniture Poverty lists charities locally and nationwide that can help with providing free or affordable furniture and white goods for people on low incomes. These are usually donated by the public and then checked for fire safety (tags on sofas and mattresses) or PAT-tested (electrical goods). Emmaus and Reuse Network have outlets nationwide, and Family Fund can offer grants for disabled children.make