Credit Unions

What is a credit union?

A credit union is a group of people who agree to save money together and to lend to each other at a low rate of interest. They will all have something in common, usually the place where they live or work. This is known as the 'common bond'. The credit union is owned and controlled by its members, who all have an equal say regardless of the amounts they have saved.

Credit unions are:

• co-operative
• non-profit making
• democratic
• local
• accessible

Anyone who belongs to the common bond can become a member. A volunteer "Board of Directors" is elected by the membership to set the strategic direction and oversee the policies of the credit union. Any member is eligible to join the Board so why not do it and have a say in how your money is used?

Savings

The members of a credit union pool their savings together; these savings then provide a reservoir of funds from which loans can be made. When the credit union makes a surplus you will receive a return on your money known as the annual dividend. This is similar to the dividend paid on shares and can provide up to 8% return on savings. However, the rate is set at the AGM and could well be less.

Loans

Loans are made to members after they have been saving for a certain period, normally three months. They are based on your ability to repay and your savings record, not on your previous financial history. Usually you can borrow up to twice the amount you have saved or three times for subsequent loans. The maximum rate charged is 2% per month on the declining balance, equivalent to 26.8 APR, and will never increase as it is fixed by law. This is a competitive rate, especially for small loans, which most High Street lenders don't want to bother with. The Credit union may charge a lower rate depending on the circumstances of the loan.

How safe are credit unions?

All credit unions have to comply with a large amount of legislation and they are regulated by the Financial Services Authority. By law they have to be insured against fraud and they must also have their accounts independently audited every year. They are also covered by the Financial Services Compensation Scheme, protecting all deposits up to £50000

A global movement that's on your doorstep

There are currently 36,000 credit unions in over 80 countries with a total membership of over 100 million people and the good news is there is probably one near you.

Below is a list of the credit unions already operating in Bristol including some that are at the development stage.

Bristol's Credit Unions

There are two credit unions in Bristol:

Bristol Credit Union
112 Cheltenham Road
Stokes Croft
Bristol
BS6 5RW
e-mail: info@bristolcreditunion.org.uk
www.bristolcreditunion.org

Severn Four Credit Union
The Springfield Room
Shirehampton Public Hall
Station Road
Shirehampton
Bristol
BS11 9TX
Tel: 0117 938 1439
email: severnfour@hotmail.com
www.severnfour.co.uk