Hi there

Like the previous post has stated some credit unions are different. My local one you have to save a minimum of 8 weeks before a loan is considered, but loans for more than £2000 evidence of income is required.


Credit Unions are great, particularly in a recession. They work well for savers and borrowers.

Put simply:-

- Where can those people on low incomes or with poor previous credit get a competative loan rate?

- Where else can you put your money that is 100% secure, that doesn't pay fatcat wages, doesn't get invested in unethical companies and actually helps other people?

Whilst the credit union does perform credit checks and checks that the person can prove a 'capacity to repay' - the worse case interest % of 26% is miniscule to those advertised elsewhere. Doorstep lenders charge between 182-400% and in the recent Ascent of Money programme on C4, a scottish loan shark was charging 25% a week - 11 million % APR!!!

A good example is a £400 washing machine loan, paid roughly over a year. The Credit Union would charge £28, and a doorstep lender would charge over £270.

A standard bank account with instant access (as per a credit union) only pays very low interest on balances, so the cost of putting your savings into a credit union is low. I would urge everyone with savings to put some into there local credit union where they can help other members of the community to achieve financial inclusion at very little personal cost (if any). Without savers (even regular small amounts that build up for a special purchase), a credit union cannot operate - and this service will dissapear from your community.

They are fully backed by the Financial Compensation Scheme, Financial Ombdusman Service and are regulated by the Financial Services Authority - doorstep lenders aren't!

My local CU is absolutely fantastic - www.lincscreditunion.org.uk - for anyone in the county of Lincolnshire.

Sorry for the long post (rant) but this is something I am passionate about!

I have benefited from loans from credit unions at times when I was desperate . A few hundred to pay a repair bill or for a special occassion means being able to sleep at night. The regulations that Credit Unions have to abide by are re-assuring for the savings you are investing. I would recommend that people find out more - you can't just walk up and get a loan - normally you have to prove that you are capable of re-paying by showing you can save on a regular basis . It does not have to be a large payment but it does have to be regular and it can be via standing order, direct debit as well as over the counter. Everybody should know about them !

In answer to "how do credit unions work" - please read the article this discussion is from http://www.moneysavingexpert.com/protect/credit-unions hopefully its all explained there. If not please let me know what is missing you think could be added.

As for an MSE credit union, you're not the first to say it - yet i have always deliberately shirked away from any MSE products. By doing an MSE credit union (if it were legally possible) we would have MSE loans and savings and I dont feel that is appropriate.


I want to thank Martin for putting the article together and helping us to have this opportunity to discuss credit unions. I have been a member of a number of different credit unions for the last 7 years, as well as being involved in the running of them, so I'm delighted to see them getting some welcome exposure.

In response to the member who posted above querying the wisdom of using credit unions at times like this, I would say that your concern is understandable but, I believe, misplaced.

Unlike the vast majority of lenders around today, credit unions lend on the basis of a person's ability to repay a loan, not just their credit history. There are countless people out there who struggle to obtain credit because of a mistake they have made managing their money in the past, (or even because banks wont have them as customers due to lack of ID). This doesnt mean they are a credit risk now, (just as a squeaky clean credit history doesnt mean there is no risk in the future). There will of course be some people who simply cant afford a loan and a credit union would turn them down just as anyone else would, (although we are more likely to help them with debt advice than other organisations).

The Credit Union I am currently a member of, (Camden Plus in North West London), considers loan applications from any member without any savings period up front. First loans may well be charged at higher interest rates, but as you 'prove yourself' to the Credit Union your subsequent loans are cheaper.

Plus, as has been mentioned elsewhere, credit unions can claim to be the genuinely 'ethical' choice for savers, as the money deposited by savers stays within the local community, rather than 'leaking out' through high interest payments on loans with doorstep lending companies and loan sharks. And because of their increasing success in lending wisely, credit unions are often paying better dividends these days, (3% to 5% is not uncommon).

One final thing - there is a very interesting article in this week's Newsweek magazine about how the 'sub-prime' lending model can be very effective for organisations like credit unions. Note that it isnt credit unions that have had to go cap in hand to governments for bail outs recently!

I'm glad theres a few more people out there that see the good side of credit unions also. The most important thing for a credit union is the spread of the word in their local community! Get telling your friends and family, your credit union is only as good as your community can help make it!

After reading the article I'm considerign joining the Credit Union through the salary deduction available through my employer.

The credit union which I can join offer current accounts and I'm seriously considering closing my current account with a high street bank to open one with the credit union as I dislike dealing with banks so much

A variation on the credit union model is Zopa, a social lending site. Investors make offers to lend to particular markets and are matched up with fully vetted borrowers, with a limited exposure to each borrower. The riskier markets pay a better rate than the safer markets, but all the money is private investors so they can't loan what they don't have.

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