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What are the Benefits of a Credit Union?

Lending Money, Borrowing Money and Affordable Monthly Repayments

Mar 11, 2009 Asa Ghaffar

Credit unions offer personal loans with affordable repayments to fellow members that need to borrow money. Those lending money benefit from interest on their savings.

Credit unions consist of regular people seeking to gain a better understanding of money management. The aim is to encourage members to regularly save money. Lending money is a perilous activity when dealing with low income families so those seeking to borrow money will need to prove affordability.

How to Join a Credit Union

It is only possible to join a credit union where a common bond exists with other members. Typical examples include belonging to the same trade union, living or working in the same area and working for the same employer. Credit unions are non-profit organisations that offer financial services purely for the benefit of its members. There are no shareholders.

What Do Credit Unions Offer Members?

Personal loans and savings accounts;
Loan protection insurance;
Individual Savings Accounts (ISA's);
Mortgages;
Funeral plans;
Debt management

Only personal loans and savings accounts will always be available. Many of the other services will only be available at the bigger credit unions.

Benefits of Joining a Credit Union?

Non-profit organisations. Credit unions are non-profit organisations working solely for the benefit of its members. There are no shareholders;
Attractive APR. Those seeking to borrow money can do so at £2 per £100 borrowed each month. This is vastly cheaper than pawnbroker loans that charge about £8 per £100 borrowed or Payday loans that charge £20 per £100 borrowed;
Affordable borrowing. Those borrowing money will need to prove that monthly repayments are affordable. This involves putting together a budget which can help someone get to grips with money problems at an early stage;
No penalties. A personal loan from a credit union can be re-paid at any time without penalty;
Regular savings. Individuals can save small, regular amounts when ever they wish. This can be useful when saving for important times of the year, such as Christmas;
Debt management advice. Members of credit unions struggling with money problems can get free debt management advice from qualified professionals. This is often better than approaching private companies that are only interested in selling debt solutions.

Anyone interested in joining a credit union can find details at their local Citizens Advice Bureau (CAB). Unlike payday loans and pawnbroker loans, credit unions allow individuals to borrow money based on affordability. This helps people avoid further money problems.

Those struggling with financial difficulties and personal debt may be interested in finding out whether they have an illegal credit card or unenforceable loan agreement. Individuals that are struggling with serious debt problems may be able to write-off debt with an Individual Voluntary Arrangement.

The copyright of the article What are the Benefits of a Credit Union? in Mortgages/Loans is owned by Asa Ghaffar. Permission to republish What are the Benefits of a Credit Union? in print or online must be granted by the author in writing.