At Quo Money we are passionate about the credit union sector. In the UK around 2 million people use credit unions for savings & loans and with government support are growing in popularity – about 7% a year!
Within this blog post we look to give a top line overview about credit unions, how they work and where you can find the one nearest to you! If you are looking for more information, check out moneysavingexpert’s blog post or findyourcreditunion’s blog post both of which offering a deep dive into all things credit unions.
Credit unions offer an alternative to banks and building societies, typically offering savings and loan products to its members. Credit unions serve what’s called a common bond, focusing specific groups of people such as by geography e.g. East Sussex Credit Union, or employer e.g. NHS Credit Union or association e.g. 1st Class Credit Union via PCS.
The first credit union in the UK as launched in 1964, growing in popularity with now over 400 credit unions available covering all types of common bond. In the UK they are relatively small but globally serve over 200 million people. Whilst just 4% of the UK adult population use credit unions, in the US its nearer 30% and in Ireland its 100%!
Credit unions are community based, not-for-profit financial organisations, set up by their members to benefit to community. All credit unions are protected by FSCS meaning that any deposits are secured up to £85,000, meaning your money is just as safe as putting it into a bank account.
Credit unions are committed to improving the financial capability of its members and are responsible lenders. When working with credit unions they will always encourage you to save and borrow only what you can afford to repay. From a savings point of view – some credit unions issue dividends that can beat the rates of the big banks hands down. From a lending point of view – the rates can be higher than mainstream lenders but not always.