FAQ (Frequently Asked Questions)
Are credit unions only for poor/deprived people?
Absolutely not! This is a common misconception. Credit unions are for everyone.
They are becoming more relevant and important as the big banks withdraw from our high streets. Credit unions are locally owned and will never turn their back on their local community. One of the main objectives of a credit union is: "The training and education of the members in the wise use of money and in the management of their financial affairs."
Credit unions are particularly handy for those who don't want to, or can't, access mainstream banks and are an excellent introduction to savings for younger people. If your credit rating isn't brilliant then credit unions are the best place to get an affordable loan. Because they are ethical, community-owned organisations they will never encourage loans that are unaffordable for the customer. Also, there's a chance a credit union might return more for your savings. Finally, by being a member of your local credit union, you own the credit union, along with all the other members in your community.
Is my money safe with a locally owned organisation? Won't it be safer with a big bank?
Your money is just as safe with a credit union - it's fully guaranteed by the UK Government-backed Financial Services Compensation Scheme (FSCS). Should anything happen to the credit union, you will get every penny back! Credit unions are fully regulated by the Financial Conduct Authority and the Bank of England's Prudential Regulation Authority - just like the big banks!
Is it true that I will become a part-owner if I join a credit union, and can have a say in how it is run and how it invests money?
Definitely! Credit unions are owned and run by the members. Once you're a member, you can become involved in decision-making by attending Annual General Meetings or other member meetings. Profits and dividends are discussed at Annual General Meetings. The members also decide who gets to run the credit union and choose the independent people who scrutinise the management and running of the credit union.
Are these new things, I've never heard of credit unions?!
The credit union movement has a long and reputable history. The first models emerged in the 1860s in Germany, often known as 'people's banks'. Today it is an international movement and in Ireland credit unions are more popular than banks. Indeed, in many places across the USA and Europe credit unions rival conventional banks for financial services.
In the UK, recent changes to the Credit Unions Act of 1979 allow credit unions to offer more services and to reach more people. But the legal remit of credit unions remains to encourage thrift, savings and offer credit to members at a reasonable rate of interest. Financial education forms a big part of the offering too.