What is a credit union?

Posted on December 21, 2022

Credit unions, although not widely known are the fastest-growing alternative to banks, building societies and doorstep/payday lenders. The aim is to help you take control of your money by encouraging you to save when you can and borrow only what you can afford to repay.

Profits made by Credit Unions are used to reward the members, and not pay shareholders or big bonuses unlike banks and other lending businesses.

At Eastern Savings & Loans Credit Union we offer a range of loans, savings accounts and a current account facility. Find out more about us.

Who are Credit Unions for?

Credit unions are for everyone. You are more than an account holder, you are a part owner. All Credit Unions are owned and controlled by their members, who use their services. Your vote counts, and you can become involved in decision-making by attending the Annual General Meeting or other member meetings. The volunteer board of directors is elected by the members to manage the Credit Union. Each member’s ideas and opinions are valued equally no matter how much or how little they have in savings. Credit Unions operate to promote the financial well-being of their members. Profit is returned back to members in the form of a dividend on their savings.

What type of savings accounts do they do?

All credit unions are authorised and regulated by the Financial Conduct Authority (FCA) and also covered by the Financial Services Compensation Scheme (FSCS). The savings account is ultra-flexible allowing you to save large or small amounts weekly, monthly or whenever you can. You can make deposits via standing order, in the branch or via Pay Point locations. You can even save directly from your wages.

At Eastern Savings & Loans the account also includes built-in life insurance. This means that if you die your savings are doubled and can be paid to a person you specify, (subject to certain terms and conditions).

Our Dividend Saving Account is an instant-access saving account, you can withdraw from your savings via our online banking service, or our telephone banking service. Find out more.

Are Credit Unions just for people who are struggling financially?

No, credit unions offer a wide range of loans, depending on the Credit Union, some larger Credit Unions offer mortgages. At Eastern Savings & Loans we offer loans from £300 – £4,000. Credit Unions are a regulated alternative to payday loans, or doorstep lenders for smaller loans, or banks for larger loans. All Credit Unions only offer loans to their members, so you have to join the Credit Union before you apply for a loan. The interest rate varies depending on the loan amount and the member’s personal circumstances. However, the interest is considerably less for short-term loans, including payday loans. There are added benefits too, with no charges for early repayments, and free life insurance too.

Do Credit Unions offer other products?

At Eastern Savings & Loans we have The Engage Account. You can have your salary paid in, set up direct debits and standing orders from the account, take out money at cash machines, and use the debit card in shops and online. The account costs £3.50 per month and comes with Cashback Rewards at a range of national retailers. Many members receive more in rewards each month than the account costs.

You can find out more information about Credit Unions in the UK via the Find Your Credit Union Website, the Money Advice Service or Citizen Advice.