Everything you need to know about credit union loans and savings accounts, including where to join one and what interest rates you can expect

How are credit unions run?

Credit unions are owned and controlled by their members, so they have no outside shareholders to pay. They are run by volunteers elected by the membership.

Any profit that a credit union makes is used to develop the credit union and provide a return to savers.

Are you eligible to use a credit union?

You’ll need to check whether there’s a credit union in your area, or if there’s one for people from your profession – an easy way to do this is by searching the site Find Your Credit Union – set up by The Association of British Credit Unions Limited (Abcul).

You can also call Abcul on 0161 832 3694.

As mentioned above, some credit unions will have relaxed their eligibility criteria – but you’ll need to check first.

What services do credit unions offer?

Credit unions typically offer savings and loans, but some also branch into current accounts, mortgages and prepaid cards.

Reportedly, around 60 credit unions now offer current accounts, 40 have a prepaid card service, but very few offer mortgages.

As savings and loans are the most common services on offer, the rest of this guide focuses on how they work.

Credit union savings: is my money safe?

Yes – your savings are as safe as they would be with a bank or building society.

Credit unions are licensed deposit-takers, authorised and regulated by the Financial Conduct Authority.

Just like ordinary savings accounts, they are fully covered by the Financial Services Compensation Scheme (FSCS) up to the standard limit of £85,000 per individual.

Do I earn interest on credit union savings account?

Previously, credit unions could not pay interest on savings, only a retrospective dividend.

But, credit unions can now pay interest on savings, which means it will be easier for people to compare the rates of return with other savings providers and will help credit unions attract more savers – although most still pay a dividend.

Contact your local credit union to find out more information about what level of dividend it has paid in recent years, or whether it offers interest on savings.

Can organisations can join a credit union?

Under the old rules, only individuals were able to become members of credit unions. The new rules mean that organisations themselves can join a credit union (up to a maximum of 10% of the members) and use the financial services it provides.

A community group, housing association or local employer, for example, may now be able to use a credit union to manage its money, with the added advantage that the money is kept in the community.

Saving with a credit union: FAQ

We give answers to some of the most common questions about saving with a credit union.

 

How are credit unions run?

Credit unions are owned and controlled by their members, so they have no outside shareholders to pay. They are run by volunteers elected by the membership.

Any profit that a credit union makes is used to develop the credit union and provide a return to savers.

Are you eligible to use a credit union?

You’ll need to check whether there’s a credit union in your area, or if there’s one for people from your profession – an easy way to do this is by searching the site Find Your Credit Union – set up by The Association of British Credit Unions Limited (Abcul).

You can also call Abcul on 0161 832 3694.

As mentioned above, some credit unions will have relaxed their eligibility criteria – but you’ll need to check first.

What services do credit unions offer?

Credit unions typically offer savings and loans, but some also branch into current accounts, mortgages and prepaid cards.

Reportedly, around 60 credit unions now offer current accounts, 40 have a prepaid card service, but very few offer mortgages.

As savings and loans are the most common services on offer, the rest of this guide focuses on how they work.

Credit union savings: is my money safe?

Yes – your savings are as safe as they would be with a bank or building society.

Credit unions are licensed deposit-takers, authorised and regulated by the Financial Conduct Authority.

Just like ordinary savings accounts, they are fully covered by the Financial Services Compensation Scheme (FSCS) up to the standard limit of £85,000 per individual.

Do I earn interest on credit union savings account?

Previously, credit unions could not pay interest on savings, only a retrospective dividend.

But, credit unions can now pay interest on savings, which means it will be easier for people to compare the rates of return with other savings providers and will help credit unions attract more savers – although most still pay a dividend.

Contact your local credit union to find out more information about what level of dividend it has paid in recent years, or whether it offers interest on savings.

Can organisations can join a credit union?

Under the old rules, only individuals were able to become members of credit unions. The new rules mean that organisations themselves can join a credit union (up to a maximum of 10% of the members) and use the financial services it provides.

A community group, housing association or local employer, for example, may now be able to use a credit union to manage its money, with the added advantage that the money is kept in the community.

Saving with a credit union: FAQ

We give answers to some of the most common questions about saving with a credit union.