I have been a member of my local Credit Union since it started, about 10 years ago. In fact, I am proud to say that I am Member number 31! Although Credit Unions all have points in common, there are also differences so I will start with a general look at Credit Unions, before looking at my ... Read review
Advantages: Cheap loans, democratic. Disadvantages: Not available everywhere (but you could always start your own).
...a member of my local Credit Union since it started, about 10 years ago. In fact, I am proud to say that I am Member number 31! Although Credit Unions all have points in common, there are also differences so I will start with a general look at Credit Unions, before looking at my own experience.
~What is it?~
*****************
A Credit Union is basically a financial cooperative, owned and controlled by its members. They ... ...very important concept in the Credit Union system. People often feel concern about bad payers and defaulters when considering Credit Unions. The common bond ensures that this has a far lesser incidence than it would for other types of loans; people do not want to affect other people in the Credit Union because they will know at least some of them personally. They do not feel they are dealing with a big, impersonal corporation but with people like ... more
I have been a member of my local Credit Union since it started, about 10 years ago. In fact, I am proud to say that I am Member number 31! Although Credit Unions all have points in common, there are also differences so I will start with a general look at Credit Unions, before looking at my own experience.
~What is it?~ ***************** A Credit Union is basically a financial cooperative, owned and controlled by its members. They offer affordable loans and encourage members to save. They are run by a volunteer board of directors democratically elected by members. Anyone can join, as long as they are part of the 'common bond'. This could be people living in a shared area, working for the same employer or belonging to the same association. This is a very important concept in the Credit Union system. People often feel concern about bad payers and defaulters when considering Credit Unions. The common bond ensures that this has a far lesser incidence than it would for other types of loans; people do not want to affect other people in the Credit Union because they will know at least some of them personally. They do not feel they are dealing with a big, impersonal corporation but with people like them. And of course, the credit union is insured. Important too is the 'not for profit' ethos, particularly when we hear of banks announcing record profits all the time, but still happy to raise charges for customers and to pay their workers badly. Therefore Credit Unions do not discriminate on the grounds of earnings or residence when awarding loans. They are also happy to welcome savers, no matter how much (or how little) they save.
~History~ ************* The principles and ideals that underpin the credit Union concept follow the industrial revolution and the cooperative movement closely. The movement started in Canada and the States where it became an influence for the rest of the world. In Ireland, a Credit Union was founded in 1958 by a schoolteacher and her colleagues and it was to be the first of many there. It took much longer for the movement to start in England, Scotland and Wales. I'll talk about Scotland here because I know more about that, but I would guess the history is much the same in the rest of the UK. In Scotland, then it all started in 1970, under the impetus of an unemployed painter and decorator, Bert Mullen, who founded the Western Credit Union in the deprived area of Drumchapel. After that, nothing much happened until the 1980s where an upsurge took place, to get to today's membership of 125,000 in over 120 Credit Unions. The worldwide membership is 118 millions, in 40,258 Credit Unions, in 79 countries. Some countries like the USA and Australia count 30% of the population as members, whilst in Ireland, this figure reaches a staggering 50%.
~Saving~ ************ In these times of easy credit and cheap (relatively) interest rates, where we are encouraged to borrow and 'flex that plastic' all the time, Credit Unions go against the grain a little, as they actually encourage people to save. This is made easy by setting up local collection points and allowing members to pay directly from their wages. This I believe is a great way to save, particularly if money is tight, as you never actually get the money and are therefore less likely to miss it. The dividend paid to members varies, according to the size of the Credit Union, and the amount of reserve they have. My Credit Union is not actually big enough to pay dividends, but some of the bigger ones give their members as much as 8% on their savings, a handsome return I'm sure you'll agree. For those of you for whom investing ethically is important, it is worth noting that all the money you save up will be used locally to provide loans for the other members who are neighbours or colleagues.
~Borrowing~ ***************** When you are on a low income, it is very difficult to get credit. And yet, most of us could not manage certain purchases outright, even if we get a decent wage. There have been reports of entire streets unable to get credit, due to the credit history of a few of its inhabitants. This of course makes loan sharks very happy. They will lend to anyone, but the cost of borrowing from them is usually exorbitant. Some people, who have no choice but to borrow money in this way, find themselves in appalling situations. Very recently in the news, there was a story of such a loan shark, who was charging 150 to 200% interest for loans and tried to force his 'clients' to pay back using threats of violence, sexual intimidation and physical assault, even on pregnant women. This is where the Credit Union offers a real alternative. By law, the maximum a Credit Union can charge is 12.7%. This is charged on an ever reducing balance, which means that every week or month, you will pay less and less interest. Many Credit Union's rate is even lower. There are no hidden charges and you do not get penalised for repaying the loan early. As an experiment, I used the loan calculator provided on the ABCUL website to calculate the cost of a £1000 loan over 2 years and compared it with the Royal Bank of Scotland (my own bank, and one which made record profits last year).
Royal Bank of Scotland ####################
APR: 15.6% Total Monthly repayment: £54.56 Monthly Insurance Loan Repayment: £6.28 Total Loan Insurance: £130 Total Payable including Loan Insurance: £1,309.44
Credit Union ##########
APR: 12.7% Free Insurance with the loan (member's benefit) Total Monthly Repayments: £47.07 Total Repayment: £ 1,129.76
The total amount you can borrow is based on ability to repay the loan (now, that is sensible but it seems banks have forgotten this rule). In my Credit Union, you can borrow up to two and a half times the value of your shares (savings). Members are encouraged to continue saving whilst repaying their loan, which means their savings will have grown by the time they have finished repaying their loan.
~Volunteering~ ******************** Credit Unions are run by volunteers. Ideally these should have excellent people skills, a basic knowledge of accounts and some knowledge of Credit Unions, but full training is given to all the volunteers. People who volunteer to work in their Credit Union will be helping their local community and acquiring many relevant, transferable skills. A volunteer's job in a Credit Union can often be a first step towards entering or re-entering the job market, as it builds confidence as well as skills.
~Benefits~ ************** To its members, a Credit Union offers motivation for saving and affordable loans. It also offers free life insurance as your relatives get double the value of your share in the event of your death and any loan is paid off. It is a very ethical (sometimes profitable, sometimes not) way of saving which benefits your local community. Credit Unions can tailor their services to suit an individual's circumstances.
To the wider community, a Credit Union improves the general financial knowledge of its member and offers training to its volunteers. It invests local money locally and helps restore a sense of pride in disadvantaged and disaffected communities. It provides means of targeting financial exclusion, identified by the government as one of the principal aspects of a cycle of deprivation. Bigger Credit Unions also employ paid staff.
~My experience~ ********************** When I look at my saving books (I'm on my second one), I feel like I am looking back at a little bit of my history, retracing fortunes and misfortunes and changing circumstances. Although my situation has changed enormously in the last few years and is no longer precarious, I still take out the odd loan. It is cheaper than borrowing from a bank. And I try and save a little, as much to build a modest egg-nest as to be involved in the Credit Union. After all, their motto is "people helping people".
~references~ ****************** http://www.abcul.org/page/index.cfm http://news.bbc.co.uk/1/hi/england/hereford/worcs/4734022.stm Leaflets from my local Credit Union
Advantages: Save as you borrow and pay back Disadvantages: Limited membership can affect how much you borrow
Credit unions are becoming more and more popular with savers and borrowers who are disillusioned with the de-personalisation of the larger banking institutes.
There are literally hundreds of small , local credit unions all over the country and a growing number of larger, Regional ones.
What is a Credit Union?
A credit union is a non profit making savings and loan organisation, usually run by volunteers (if small and local) or run by a small dedicated ... ...When you join a credit union you usually pledge to save a certain amount each week/fortnight/month, your savings in a CU are called shares. After a set period of time (usually two or three months) you can apply for a loan against your shares, the amount you can borrow can vary from Credit Union to Credit Union but usually it is about five times the amount of shares you have invested in the CU.
Here comes the clever bit.
Once your loan has been ...
jimblob 19.03.2003
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Ciao members have rated this review on average: very helpful Review of Credit Unions
Advantages: Easy and Quick to Borrow from Disadvantages: Most of them you have to save and repay
...of people dont realise what credit unions are, do you ?
I am in two credit unions, one was from my time in the police and the other is the local credit union were i live. i have been a member of each for about 5 years.
I live in a private house, mine yeahhhh! at last...sorry but we lived in a concrete flat with noisy neighbours. I needed initally to start to save for the deposit on my house. now im not on a lot of money, i have a retirement pension ... ...i live in is a credit union area, volunteers make up staff and its basically run like a bank. you save what you want each week whether it be 50p or £200. they sign your book. It sometimes takes a day or two to get your money out, but this was brilliant for me as when i wanted the money, i got it elsewhere and it stayed in the credit union. In my local credit union, you have to save for 10 weeks out of 13 weeks and then you can apply for a loan. the ...
BUBBLES171 06.11.2003
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Ciao members have rated this review on average: very helpful Review of Credit Unions
Advantages: Total control over your money Disadvantages: None
...a member of my local credit union, Walsave, since it began over three years ago, as both a saver and a borrower.
I joined via my then employer, Walsall MBC, who were sponsoring the setting up of the Credit Union. The authority initially paid the salary of the Credit Union manager together with providing the office space free of charge.
The whole thing has grown rapidly and now pays its own manager plus two further staff. It has also encompassed ... ...over the year.
The Credit Union also provides free life insurance so that if a member dies any outstanding loan balance is written off. You can also sign a form to say who you would like to receive the balance of your saving s in the event of your death.
There are various committees consisting of members of the Credit Union who approve new members, loans etc and who make the decisions about the running of the Union. Anyone is free to join any of ...
SusanLesley 23.04.2001 (30.10.2001)
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Ciao members have rated this review on average: very helpful Review of Credit Unions
Advantages: an easy way to save Disadvantages: none
For me the Strathclyde Credit union has been a godsend. I will admit it I'm a terrible saver any money I earn goes in one hand and straight to the nearest shop. I have tried savings accounts many times but as soon as I deposit the money I am back to withdraw it a few days later after seeing a much needed purchase. One of my collegues told me about the credit union and I decided to join as she made it so tempting and easy. I work for what was then ... ...me to join the largest credit union in Glasgow. How you join: Joining is very simple as long as you are a council employee you just fill in a simple form with your address and payroll number and how much you want to be deducted and how often. After this the credit union will deduct the stated amount right off your wages, perfect for me as you don't see them the are taken off before it reaches your bank account. Benifits of joining a credit union: ...
jenny029 08.08.2001
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Ciao members have rated this review on average: very helpful Review of Credit Unions
Advantages: Cheap interest on loans Disadvantages: some collection point time may be during the day
Credit unions! Why don't we use them more than we do. Is it because they have some stigma related to them? Maybe, but I think if a few more of us considered having a savings account with them the banks might just start noticing a few customers closing their savings accounts. I joined our local credit union in Stockport, my mum joined first and gave me some info about them and it seemed a good idea. I am hopeless saving money - it goes in the bank ... ...my version of what a credit union is and does.
WHAT IS A CREDIT UNION
A credit union is normally ran by volunteers, who have collection points on various days. You go along and apply to be a member take some form of ID with you. Also you don't have to be working to open an account. Its not really flexible enough to be used to have salaries paid in, because you have to wait a week to withdraw any money you've saved.
You normally have to pay a pound ...
Bevdav 23.05.2001
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Ciao members have rated this review on average: very helpful Review of Credit Unions
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