APPENDIX 2
ABCUL Information Sheet
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Credit Unions - What’s different about them?
Everyone seems to be after your money these days. Newspapers are full of adverts
offering savings schemes or loans, so what makes a credit union different?
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An easy way to save
A cheap way to borrow
Insurance on savings and loans at no extra cost
Run by volunteers – low overheads
Profits returned to members
Money stays in the community
Owned and run by the members, for the members
Regulated and insured so you know you money is safe
Part of a world wide movement
Savings schemes for young people too
Who can join a credit union?
Anybody over the age of 16 who is within the common bond.
What is a common bond?
A common bond is something that all the members of a credit union have in common.
It may be that they live or sometimes work in the same community, work for the same
employer or belong to the same association.
So how does it work?
Members savings are pooled together to be used as a common fund from which
members can apply for loans.
Savings
As a credit union member, you can save as often as you like, and up to certain legal
limits, as much as you like. Even if you are only saving a small amount each week,
you will be surprised at how quickly it mounts up.
Loans
Once you have saved for a while – usually about 3 months- you can apply for a loan.
By law, the maximum Annual Percentage Rate (APR) that can be charged is 12.68%.
The amount you can borrow will depend on your savings and the amount in the
common fund. Individual credit unions set their own loan policies. You carry on
saving as you repay your loan, so you end up with more money than you started with.
Savings for under 16s too
Anybody under the age of 16 who is part of the common bond can save with the
credit union and receive interest on their money.
Dividend
Once a credit union has become established, the money it makes from interest on
loans can be returned to its members in the form of a dividend.
This will vary from credit union to credit union, but often beats high street rates.
Community
The people in your credit union are your neighbours or colleagues. When you pay
interest on your loan it does not disappear in to someone else’s pocket but stays in
your community. People are also less likely to default on loans if they know the
people they are borrowing from. The social side of credit union life can be great too!
Safety
Credit unions are run by volunteers but they still have to satisfy the Registry of
Friendly Societies (a government body) that they are capable of looking after
members’ money. By law, insurance against fraud has to be in place.
Annual independent audits also have to take place.
Democracy
Everyone has one vote in a credit union, regardless of how much they have saved. A
credit union is run by a Board of Directors that is elected annually by the members.
Any member over the age of 18 can stand for the board, it’s a great way of learning
new skills and making new friends. Training is always available.
International
Credit unions were started in Germany, nearly 150 years ago. They are now
established in over 90 countries across the globe. Nearly half the population of Ireland
belongs to their local credit union and so do over a third of Americans.
If you want to know more about credit unions, find out if there is one in your area or
would like details about how to set up a credit union, contact:
The Association of British Credit Unions
Holyoake House
Hanover Street
Manchester
M60 0AS
Tel 0161 832 3694
Fax 0161 832 3706
E-mail info@abcul.org
Website www.abcul.org