Why should I join a credit union?

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Credit union membership has doubled in the last 10 years, and now stands at around 1.5 million (Financial Times, 8 February 2015, http://www.abcul.org/media-and-research/news/view/541 )

So why are more and more people turning away from banks and joining their local union?

This great little cartoon short from Canada (where credit union membership stands at more than 40%) explains the benefits:

 Put simply, credit unions trump banks because:

 Banks are run for profit to benefit shareholders. Banks pay their board of directors to maximise profits through banking fees and high interest rates on loans. Bank directors do not have to hold an account with the bank, or even live in the same country.

Credit unions are owned and run by their members, who are entitled to vote at the annual general meeting. The board of directors is made up of volunteers, who run the credit union for the benefit of all members, which is why credit unions offer low interest rates and share surplus earnings in the form of dividends. By law credit unions are unable to charge more than 3% loan interest per month. All loans carry free life insurance, subject to terms and conditions, and there are no setting up or penalty fees.

A key benefit of credit unions is that they offer small loans (eg £500 – £3,000) to individuals, families and small businesses, which most buy ventolin inhaler online uk high street banks won’t do.

Credit unions are just as safe as banks and building societies. They are fully regulated by the Financial Conduct Authority and Prudential Regulation Authority. Members’ savings up to £85,000* are protected under the Financial Services Compensation Scheme.

Better still, credit unions are rooted and actively involved in their communities, working to promote financial education and supporting local families and businesses. They offer face-to-face, friendly and ethical services.

Understanding APR

Norwich Credit Union, for example, only charges 1.5% per month on the unpaid loan balance (APR 19.6%). At this rate, when you borrow £100 and pay it back in equal monthly payments over a one-year period, you only pay £10.02 in interest, or 83p per month.

About Norwich Credit Union

Norwich Credit Union was established in 1989. Since then it has lent more than £1 million to members. Membership costs £1 and is open to anyone living or working in NR1-NR35 postcode areas. The Emergency Loan Fund was launched in 2014 to offer ‘instant’ loans of up to £300 in the case of sudden financial crisis. Individuals (members and non-members) must meet the criteria for approval and be referred by one of the credit union’s partner agencies.

To find out more or to join, call our office on 01603 764904 / 07504 433758, email  or visit our website.

*£75,000 from January 2016. http://www.fscs.org.uk/what-we-cover/eligibility-rules/compensation-limits/

 

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