Advantages Cheap interest on loans
Disadvantages some collection point time may be during the day
|Competitiveness of APR|
|Quality of Customer Service|
|Security and Privacy|
|Ease of Application|
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 pays the bills and back out again - where have I heard that before I may ask.
I only started saving £20 a month, just to see how it all went. Originally I intended to try and get some money saved up to help towards my holiday. All in all it seems to have worked quite well.Here is my version of what a credit union is and does.
WHAT IS A CREDIT UNIONA 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 to join, it helps them cover set up costs etc.A life insurance cover for your account is provided which doesn't cost you anything.
When you begin paying money to your account it is actually classed as buying shares in the union. You do get some interest but its not very much in actual fact I don't think I've received any yet.WHAT SERVICES DO THEY PROVIDE
They provide a savings account and you can also have a loan with them - you can't have an overdraft or anything like that.The loans are actually the best thing about them. To apply for a loan you have to have paid in money regularly for 17 weeks, or if paying monthly like me, for four months.
The rules for getting a loan are:-You have to give a few personal details about income going in and out, they don't like people to struggle to repay any money back. They also don't like giving loans out which involve a higher repayment each week or month than you have currently been saving with them. An example is my situation I paid in £20 a month and the loan I have just been given means I have to pay £35.80 each month, so I've had to prove I have the spare capacity.
First loan you can borrow double what you've saved.Second loan you can borrow trebble what you have saved - but at the moment ours has had to cap the trebble amount to £1,000 - everyone must have put requests in for loans for holidays etc.
If you have paid upto a third off your loan you can apply to have it topped up, this really depends on how much you have carried on saving whilst paying off your loan.You can take upto 2 years to pay the loan off - but really its better to pay it off faster.
The interest on the loans is nominal its 1%. I'm not much good at understanding percentages and APRs etc, so I'll put it in proper pounds and pence.EXAMPLE
I've borrowed £400, and will be paying back £35.80 a month. So at the end of a year I'll have paid just £29.60 in interest. Can't be bad. I pay half that amount on overdraft interest rates per month.
There may not be many offices or collecting points near where you live. But they normally advertise in the local paper, or at area housing offices.Collection times might not be convenient but you can pay by standing order / direct debit as I do.
They provide an excellent service especially to people who the banks don't want or won't give loans to. They don't make profits - just cover costs etc.Its actually been one of the best financial things I've done. The next one is to do a mini ISA to cover the shortfall I've been informed about on my endowment, but thats another story.
Join a credit union, its worth it and you never know when that little bit of money you saved may come in useful.Bev 23.5.01
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