Community finance and Credit Unions

Credit Unions

Credit Unions are local and personal co-operatives owned by members for members. They aim to educate people about money, while encouraging responsible saving and lending. Unlike banks, any profits they make remain within their local community either as dividends to members or as community investment schemes.

They are not right for everyone, but they can be less intimidating than a High Street bank or building society because they operate a less formal environment.

Membership to each union is restricted by “the common bond”. This usually means living or working within a defined area, working for the same employer, or belonging to a particular organisation, such as a trade union or church.

All Credit Unions are regulated in the same way as banks and they have insurance policies to protect them against fraud.

Before signing up to anything it’s important to research individual Credit Unions and the different accounts they offer carefully. Some of the accounts allow direct payment for salaries, pensions, tax credits or benefits payments and give easy access to available funds.

Why use a Credit Union

Credit Unions differ from banks in a number of ways. They:

• are run by their own members who are often working as volunteers
• welcome new, irregular savers and those with a poor credit history
• help people manage their finances themselves
• are not-for-profit organisations
• are for those who traditionally can’t get financial help elsewhere
• any profits that are made can be repaid to members as a dividend
• life assurance to cover a loan is usually free
• give a common bond to members
• only members can save or borrow money (with a few you have to save before you are allowed to borrow)

How to open a Credit Union account

You’ll need to prove your name and address with a valid passport or driving licence, official documents relating to your circumstances or a letter confirming your identity from an “appropriate” person who knows you (e.g. social worker, doctor or teacher).

Accounts can only be opened at a Credit Union office by completing an application form, which must be accompanied by your identification.

To find out where your nearest Credit Union is based, or get more information, contact the Association of British Credit Unions Ltd (ABCUL) ON 0161 832 3694, email info@abcul.org or visit www.abcul.org
You can also get impartial advice from the Change hotline on 020 8535 2960.

Fair Finance

Fair Finance is an ethical credit source which provides affordable loans for anything from school uniforms to debt consolidation for people who can’t normally get credit.
Loans are provided at a rate of approximately 21% APR, which is significantly less than the 170% plus charged by doorstep lenders.

Fair Finance also provides free, impartial money advice. Contact them on 020 7780 1777 or visit www.fairfinance.org.uk

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