Saving with a credit union

Saving money with a credit union couldn't be simpler. Unlike some other savings schemes, you can save as much or as little as you like, weekly, monthly or as often as you wish. You can pay in at convenient local collection points,  by standing order, benefits direct or direct from your wages.

Credit unions aim to pay a dividend on savings once a year to all their members. This can be as much as 8% of the amount that people have saved, but is typically 2% or 3%.

Life savings insurance is included, at no cost to the member, making it easy to build up a useful nest egg for you and your family. On a member's death, the amount of savings can be as much as doubled by the insurance and paid to whoever the member has chosen to nominate as their beneficiary. (Subject to conditions)

There have recently been many concerns about the low number of people who are saving; credit unions make it easy to save and even a small amount each week will soon mount up.

And when you invest in your local credit union, you know that the only people you are benefiting are your neighbours or colleagues. Credit unions keep money within a community, because there are no outside shareholders, fat commissions, huge bonuses or excessive salaries like we've seen in other areas of the financial industry.

Is my money safe? Important information about compensation arrangements:

We are covered by the Financial Services Compensation Scheme (FSCS). The FSCS can pay compensation to depositors if a credit union is unable to meet its financial obligations. Most depositors – including most individuals and small businesses – are covered by the scheme.

In respect of deposits, an eligible depositor is entitled to claim up to £50,000. For joint accounts each account holder is treated as having a claim in respect of their share so, for a joint account held by two eligible depositors, the maximum amount that could be claimed would be £50,000 each (making a total of £100,000). The £50,000 limit relates to the combined amount in all the eligible depositor’s accounts with the credit union, including their share of any joint account, and not to each separate account.

For further information about the scheme (including the amounts covered and eligibility to claim) please ask at your local branch, refer to the FSCS website or call 0800 678 1100.

Borrowing from a credit union

Borrowing from your credit union is great value. By law, credit unions cannot charge more than 2% a month on the reducing balance of the loan (an APR of 26.8%).  However, in reality most Credit Unions charge half that sum - only 12.68% APR.  What this means is that if you borrowed £300 over 32 weeks, you would repay a total of £312.69 and pay only £10 per week.  You can find out about what loans and interest rates are on offer at your local credit union by contacting them directly via the Find Your Local Credit Union page.

Credit union loans come with no hidden charges and no penalties for repaying the loan early. Life insurance is built in, at no cost to the borrower, so if you were to die before you had repaid the loan, your loan would be fully repaid and your family will NOT be left with the debt.

When you borrow from a credit union, you are encouraged to carry on saving, meaning that by the time you finish repaying the loan your savings have grown as well.