A credit union is a non-profit organisation that has exclusive benefits available to its members. To join a credit union, you must fall within a common bond, this usually relates to where you work, where you’re located or if you’re related to anyone already a member of the credit union. For example, Blues & Twos is a credit union accepting applications from people within the North West working or retired from the public or private sector including the police, fire services, healthcare, councils, NHS, education, and more.
When researching into credit unions, many people have questions before thinking about joining one. After all, we want to know that the place we’re putting our money is secure. Money is what puts a roof over our head and food on our table so it’s paramount that what we have it stored safely. Let’s talk a bit about what questions you might ask about credit unions:
Should I open an account with a bank or a credit union?
When thinking about where to store your savings, you have two options: a bank or credit union. Joining a credit union instead of putting your savings in a bank account might not be the obvious choice at first. However, most of the time, credit unions have better interest rates and lower fees than banks. Credit unions also offer a personal touch – there aren’t as many members of a credit union as there are people with a global or nationwide bank. As a result, credit unions actually care about you whereas you’re just a number in the system for banks.
If you’re a member of a credit union, you’re joining a community committed to improving their financial well-being, getting access to resources which will help with your financial literacy and free advice from experts. The team at a credit union is completely focused on its members, because its owned by its members and they are their top priority.
Why do people join credit unions?
There are many reasons people choose to join credit unions, as well as all the reasons above, one of the most important factors in joining a credit union is the ethical side. Because credit unions are exclusive, only people within your community can join – when you’re saving your money or taking out loans, you’re benefitting your community rather than a corporation which doesn’t need the money.
Is your money safe in a credit union during a recession?
In these uncertain times, this question gets asked a lot, and the answer is a definite yes. Your money is just as safe in a credit union as it would be in a bank. This is because credit unions and banks are covered by the Financial Services Compensation Scheme (FSCS) – they can offer compensation up to £85,000 if a credit union isn’t able to pay out your savings.
What are pros and cons of credit unions?
Pros:
- Lower fees
- Higher interest rates
- Sense of community
- Better customer service
- Owned by their members
- Protected by the FSCS
Cons:
- Less physical branches
- Technology won’t be as advanced, e.g., mobile banking
- Must be a member of a specific group
Is it better to get a loan from a credit union or a regular bank?
If you have the option of a credit union you can join, it’s always best to take out a loan with a credit union rather than a bank. Credit unions offer lower rates and affordable loans. Their team’s advice helps members know just how much to take out and establish a plan for paying it back. Banks are looking to make the most profit, so they have higher rates, and their staff might not dissuade you from taking more than you need out.
As you can see, there are many benefits to joining a credit union. If you’re located within the North West, I’d recommend looking into if you’re eligible to join Blues & Twos, a credit union working for you, not for profit.
