Click here to print this page

Planning Retirement Online


Have you considered credit unions?          

                            March 2009

HAVE YOU CONSIDERED CREDIT UNIONS?

 

credit union

Because this concerns finance, I must stipulate right here at the beginning that the information below has been put together by me from my own research and does not reflect official information nor the views of any particular institution.

Nevertheless, I hope you find the following interesting! Sally Smith.

 

 

British banks are definitely not the flavour of the month, and you may have noticed there is increasing talk about credit unions.

Most of us will have heard the term “credit union” but a lot of us really have little idea about what they do.

Credit unions are banks in a way, but the difference is that instead of being owned by shareholders, they are owned and controlled by members, with members’ savings being used to fund other members’ loans. A credit union’s basic objective is to serve the financial needs of its members rather than make money for its owners.

Credit unions have requirements on who can become a member, usually based on a “common bond”. This bond may be for people living or working in the same area, people working for the same employer or people who belong to a particular association such as a trade union.

Credit unions are carefully managed and controlled by a volunteer Board of Directors who are all members of that specific union and who are elected by the members at an Annual General Meeting.

The unions are regulated and authorised by the Financial Services Authority in the same way as banks and building societies and there is a group of members known as the Supervisory Committee who check that each union is acting in a responsible fashion. An auditor inspects a credit union’s business every year and a fidelity bond (an insurance policy) has to be taken out to protect the credit union against fraud or theft. Members are protected by the Financial Services’ Compensation Scheme, with the same level of protection provided to customers of banks and building societies.

Credit unions usually offer a range of services including savings and loans. They can offer current accounts and cash availability through ATM machines, etc. but not all credit unions offer the same services.

The unions are particularly useful for saving because, unlike some major saving schemes, you can usually save as much or as little as you like, weekly or monthly etc. You can also often pay in your savings at a nearby local shop or collection point. If your union is run through your place of employment, then savings can be deducted direct from your pay.

Most unions try and pay a dividend on savings once a year to all its members.

One of the reasons that credit unions are popular is because you know that the only people benefiting from any profits are other members - your colleagues or friends, or people who share an interest with you or who are employed in a similar job. Members also like the idea that the money stays local and no third party shareholders are sharing in the profits. They often provide a friendly, local and personal service in the local community and that also helps their popularity.

Credit unions come large and small but if you contact one in your area, you can find out all the details about becoming a member. As a rough count, I could find 243 credit unions in England, 72 in Scotland and 29 in Wales so you will almost certainly find one in the area where you live.

For more information, there is an Association of British Credit Unions in Manchester. They have a website which gives quite a lot of useful information: www.abcul.org or you can call them on 0161 832 3694.

 



Bookmark


Advertise on laterlife.com



LaterLife Travel Insurance in Association with Avanti