Last month the Cardinal became the 1000th member of the Churches Mutual Credit Union. Fortunately, this kind of financial service is not exclusive to Archbishops! Credit unions are there to help and encourage people to save, and to be a source of information and guidance for those in debt or who are unsure as how best to manage their money.
Intended as cooperatives to allow communities to be financially responsible and benefit their friends and neighbours at the same time, credit unions started in Germany, spreading across the UK in 1800s. Although the first recorded credit union in the UK was founded in the 1960s, they existed in less formal form before then, often being known as ‘friendly societies’. In Britain they were championed by the large Afro-Caribbean community coming to the UK at the time and began by offering the simple service of saving and lending as well as financial advice.
Credit union is perhaps a misleading term. A better way of describing it might be a ‘financial community’, a group of people who share common ground. This can be as diverse a category as living in the same area or working in the same field.
This financial community, in its most basic format, allows people to open savings accounts and obtain small loans. It works on the promise of community, that when a person saves with a credit union they are facilitating its loans, and in turn they are allowed to take small loans if and when needed. These services are run not for profit. This means that after overheads and employee salaries are covered, any profits are invested back into the credit union. All credit unions are cooperatives, meaning they are owned by their members. But this does not mean they are an amateur organisation. All money saved in a credit union is protected by the Financial Services Compensation Scheme up to the value of £75,000 per person, exactly the same level of protection as savings in a bank or building society. They offer Christmas savings accounts, notice accounts with higher returns, junior savers’ accounts, and even cash ISAs.
A key feature of credit unions is the promotion of a healthy attitude towards saving and financial responsibility that is supported by the services they offer. To find out what a particular credit union offers, it is worth contacting it before joining to enquire about their range of products. Borrowing is capped at 3% interest but is often much lower. All credit unions offer saving and lending, with payroll deduction making it much simpler to put money aside.
The Association of British Credit Unions Limited, the regulatory body, has a website which provides information about credit unions in each area. Visit: https://www.findyourcreditunion.co.uk/ or http://www.abcul.org/home for more information.