After being asked “what is a credit union?” another popular question we get asked is “what are the benefits of joining?” So here are 5 reasons why we think you should join your local credit union.
A Focus on Community & Fairness
Credit unions in the UK were first created in the 1960s as a way for people from small communities or workplaces to group together and bank fairly. The necessity for this was sparked by BAME individuals being unfairly discriminated against by big banks. Although things have come a long way since then, they still exists to serve the community. They do this by providing fair banking for people from all backgrounds and walks of life.
For example, at London Mutual, we believe that access to quality financial services is key to tackling exclusion. Our common bond covers Southwark, Lambeth, Westminster and Camden. We aim to help people within the community to create better financial habits by offering fair banking. And other than fair banking, we offer free financial education to our members, a ‘young savers’ scheme in local schools, and an overall more friendly and approachable atmosphere for anyone looking to join.
More understanding & flexible
For credit unions to offer fair banking and financial inclusion, they tend to be more flexible. Big banks or high street lenders may turn you away based on your credit history, employment status or circumstances. Credit unions, on the other hand, take a more personal approach. They will try to look into individual circumstances before making a decision.
Our specialist staff take into account the full range of individual circumstances. They do this by using bank statements and wage slips to assess someone’s ability to repay a loan or overdraft. We think that’s fairer (and smarter) than an automated system.
Member-owned
All credit unions are cooperatives. This simply means that the members (a.k.a you) own the business! Once you become a member of the credit union, you become a part-owner. The benefits of this are that you have a say in how the business functions. Every year they hold an Annual General Meeting where the credit union invites all members to give their thoughts and opinions.
As credit unions are not for profit, any money made by the company is put back into the company to improve the services. They also pay profits back to members in the form of a dividend. This is one of the big differences between credit unions and banks.
Low rates
Credit unions tend to offer lower rates on their loans and overdrafts compared to online lenders and expensive credit cards. Some people may want to borrow from an online lender, but do not realise the high-interest rates added to their loans.
In some cases, people might struggle to borrow from a high-street bank due to their credit history or financial behaviours. These people will often think they have no choice but to go with an expensive online lender, or even with an illegal loan shark. However, credit unions are a great alternative as they offer fair rates and a more understanding approach to loan applications.
Fully regulated by the FCA & PRA
Lastly, credit unions are fully legal and regulated by the Financial Conduct Authority (FCA) and authorised by the Prudential Regulation Authority (PRA). This means that your money is safe and secure. The money you save into a credit union account is protected by the same Financial Services Compensation Scheme that covers banks and building societies.
