What is a Credit Union?
A Credit Union is a non-profit making financial co-operative, owned and run by its members, that offers an accessible savings facility and low interest loans to its members.
The three main aims of a Credit Union are:
- To encourage its members to save regularly
- To provide loans to members at very low rates of interest
- To provide members with help and support with managing their financial affairs
What Are The Benefits of a Credit Union?
- It is an easy and convenient way to save
- It offers very low cost loans
- It gives members insurance at no direct cost
- It’s a way to learn new skills
Credit Unions can provide a focal point for a community by bringing people together, to work alongside each other for their own benefit and the benefit of the community as a whole.
A Credit Union can help to revive the local economy by keeping money in the community. Loans to members can mean income for local shops and businesses.
How Do They Work?
The members make regular savings, as little or as much as they wish – these savings then form a common pool of money from which loans are made to members. When clients have been a member for 10 weeks, and saving for 8 consecutive weeks they can apply for a loan from the pool. Interest rates on the loans are variable, and interest is charged monthly on the reducing balance.
Are They Insured?
They are insured against fraud and theft.
They provide life and loan protection insurance at no direct cost to the member, payable to a nominated beneficiary.
The life savings insurance means that if you die, your beneficiary can receive 1.5 times the value of your shares.
The loan protection insurance covers the amount of your loan outstanding – age limitations apply.
Who Can Join A Credit Union?
People who can join a Credit Union must belong to what is called a “common bond”. This could be that you reside in a specified area, or that you work for a particular employer, or that you are a member of a club or association. Credit Unions welcome everybody within the common bond, regardless of income, employment status or age.