Do you know about the benefits of credit unions?

We’re all trying our best to live within our budgets these days, but with the Cost of Living Crisis, sometimes it’s just not practical. Managing a family budget at the best of times is tough, but we are challenged to the limit when things like the fridge breaks, or the kids need new school shoes. 

 

 

A loan that’s right for you and the benefits of credit unions

We all know it’s best to save for those emergencies and have a bit put aside for that rainy day.

However, during times like these we may just need that helping hand to help with emergencies. 

That’s where community finance can help us.  

 

So what are your Community Finance options?

From Credit Unions working with certain employers or serving a town or city to local and national social lenders, community finance providers come in many different guises – but they all have your interests at heart.

Lots of people love Credit Unions because they are not-for-profit and member-owned, which means they put the needs of their members first and are dedicated to helping people in your community. In England, Scotland and Wales, there’s a cap on the amount of interest that credit unions can charge on their loans of 3% a month (equivalent to 42.6% APR) but many will offer you a lower interest rate. 

Credit Unions offer membership depending on where you live or work. If your employer has a payroll partnership with a credit union, you’ll be able to save regularly, or borrow and make repayments, directly from your salary, or check your local community and see if there is one near you.

Social purpose lenders are another option to consider and are described by their customers as a lifeline. They’re members of Responsible Finance, and include the likes of Scotcash, Moneyline, Fair for You and Fair Finance. Most are not-for-profit meaning they’re able to reinvest any surplus in order to keep interest rates and repayments as low and as flexible as possible for their customers. 

 

The Benefits of Credit Unions – They will check a loan is right for you

You’ll still need to have your eligibility checked when you apply to a Credit Union or responsible finance firm because they’ll need to check that you can afford repayments without putting undue pressure on your finances. They will be as open-minded, fair and transparent as they can be and  may be able to help even if you have been turned down by other mainstream providers.

They can also often point you in the direction of other financial support. Many will have integrated benefits calculators that could identify £100s in unclaimed benefits each month. Many people in work are surprised to find out they’re missing out on what they’re entitled to  – meaning they potentially don’t have to take out the loan they thought they needed.

 

Why I simply love Credit Unions

You don’t often hear people say that they love their bank, do you? But I do simply love credit unions and am an advocate for more and more people joining them. I’ve been involved with Credit Unions since 1994 and have seen how they strengthen the financial resilience of individuals, I started out volunteering at my local community Credit Union in Liverpool before joining Enterprise Credit Union in 1998.

 

 

I like their simplicity and the social purpose. People save together and from those pooled savings they lend to each other all year round. It might be for that emergency or the dream holiday you keep promising yourself. With over 1.4 million people using Credit Unions in the UK, they’re helping people navigate the difficult times, and helping them plan for the future too. 

 

Financial protection and the benefits of credit unions

Credit Unions and Community Banks are fully regulated, financial co-operatives, offering affordable loans and simple savings accounts. They don’t charge massive interest rates and any surplus made will go back to their members as a dividend. 

Loans start from as little as £50, and you also save at the same time as repaying the loan, meaning you start to build up your own savings pot. 

 

How to find a credit union or social lender

Having access to credit in challenging financial times is part of building financial resilience and simply knowing your likely options should you need financial support can be a huge relief. There are two helpful directories to help with your research: Find Your Credit Union helps people find a credit union near them or one that works with particular employers. Finding Finance is the place to go to find simple, fair, small affordable loan providers.  

 

The author of the benefits of credit unions Karen Bennett CBE is CEO of Enterprise Credit Union and an advocate for credit unions