What is a credit union?
A credit union is non-profit alternative to a commercial bank. Traditionally, they operate for a collective of people – brought together by a ‘common bond’ such as a community or employment – to create a financial institution that aims to help the community.
Everyone who has an account with them – even if they just put in £1 – is a partial owner.
And they’re very popular! The NHS has got one for its employees and in Ireland and the US they are used more than banks. There are even more ATMs in America for credit unions than banks! 84% of Just Credit Union members said they were ‘very likely’ to recommend to a friend.
Low interest loans & savings accounts
Credit Unions are there for everyone but often lend to people traditionally unable to access loans at reasonable rates. Credit Union’s recognize that people may have had financial problems in the past and are more interested in ensuring a loan is affordable rather than your financial history. If they find you can’t afford the loan then they won’t lend to you, so you don’t get into further financial hardship, but they will pinpoint services which can help you.
One reason people turn to credit unions over banks is that banks won’t give small scale loans as they’re hard to make money from. Credit Unions APR’s are capped which makes them a much safer place to borrow from than payday lenders with very high interest rates or illegal loan sharks. FairShare offers loans from £50 to £15,000 and Just Credit offer loans starting at £250.
But they’re more than just a loan. You will open a savings account with them to help you save and borrow at the same time, so by the time the loan is paid off you will hopefully have money left over!
Who are they for?
Both of Shropshire’s credit unions common bonds are geographical for Shropshire (Just Credit also covers Telford and Wrekin). That means anyone who lives, works or studies in Shropshire can be a member– including anyone who works for a Shropshire based company too.
Just Credit Union was originally set up by Shropshire Council to help people who were financially excluded for any reason – maybe by their credit history, divorce, redundancy, sickness, or living in a remote location. They’re now independent and can be used by anyone, but they still keep this as key to how they work. They are NOT financial or debt advisors but will refer people onto them where necessary and they also regularly share tools and information with their members to help them make the most of their money.
Credit unions vs banks
The main difference is that Credit Unions are NOT for profit. Whilst not a charity, Credit Unions have similar governance – with a volunteer board of directors and trustees who oversee management. . Credit Union’s are owned and managed for the benefit of their members and the profits are shared with the members who save with them.
Another difference is the size, credit unions are smaller and based in the community and they like to develop a personal connection with their members. All money saved with the credit union circulates in the local community, thereby supporting the local economy.
Get in touch now!
Both FairShare and Just Credit Union have adapted their systems to be largely online for Covid. Visit their websites to get set up.
You can find out more about Shropshire’s Credit Unions by visiting their websites: