Credit Unions


A credit union is a cooperative financial institution that is owned and controlled by its members and operated for the purpose of promoting thrift, providing credit at competitive rates, and providing other financial services to its members. Many credit unions exist to further community development or sustainable international development on a local level.  [Wikipedia]

  • A member is required to regularly pay an amount  in (often a mininum of £1 per week 13 weeks) before being allowed to borrow from the union.
  • The amount that can be borrowed is a multiple of what has been paid in.  The Union that I spoke to confirmed that money already paid in (called shares) remains in the account during borrowing,
  • Interest is not charged on the shares when borrowing, only the amount in excess of the shares.
  • Interest charged seems to be typically 1% per month, which equates to 12.67% APR.
  • Dividends will vary, but at the moment 0% is typical.
  • Credit Unions do not invest in the stock market.
  • Credit Unions are regulated by the FSA and money saved is guaranteed to the same extent as banked savings.
  • Debts die with the person.

Increased use of credit unions would … ?


  • Remove some of the money people save with and borrow from the banking system.   
  • Put people collectively in control of how their CU is run.   
  • Encourage individuals to save a small amount towards what they might need to borrow.
  • Prevent some of the poorest people committing themselves to very expensive sources of borrowing such as the door to door lenders.




To find your local credit union visit or call the Association of British Credit Unions (Abcul) on 0161 832 3694.


ABCUL has welcomed the news that the Draft Legislative Reform Order (LRO), which is making changes to the Credit Unions Act 1979, has been approved by committees in the House of Commons and House of Lords and will now move to debates in both Houses.

Approval of the LRO will mean that credit unions will be allowed to provide services to community groups and businesses, add in new groups of people who will qualify for membership and pay interest on savings.  The changes should be in force by early in the New Year.

20 Oct 11


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