What are Credit Unions?
What is a credit union?
Credit unions are * “not-for-profit” financial co-operatives, which are democratically owned and managed by the members who use them.
(* The term not-for-profit should not be confused with non-profit. Not-for-profit means that they operate to serve their members rather than to maximize profits, whereas non-profit means that they rely purely on donations to fund the organisation.)
How do they work?
Members of a credit union save in a common fund which is used to give low interest loans to the credit union members.
Membership of a credit union is based on a ‘common bond’, which is usually linked to where a person lives or works.
All interest generated on loan repayments is reinvested back into the credit union; meaning that nothing leaves the community.
What are the benefits of joining one?
- The customers are the owners.
- An easy and convenient way to save and borrow.
- Are not-for-profit organisations.
- Fewer fees and higher savings rates.
- Insurance at no direct cost.
- A way to receive help and support on managing financial affairs.
- A way to learn new skills.
- Bring communities together.
- Can help to revive the local economy by keeping money in the community.
Once the welfare reform, via Universal Credit, goes live (which will end direct payment of housing benefit to landlords) Landlord Referencing Services whole heartedly believe that credit unions will be able to offer the best solution to rent arrears and evictions. Meaning that for a small fee the rent can be ring fenced, so that it is paid to the landlord via the credit union account and cannot be spent by the tenant.
Our Credit Union partners.
Discussion forum topic: Credit Unions – How do they work and do they work to benefit anyone apart from themselves?