Ever since the recession began, the public has been falling out of love with banks. Barclays' recent announcement of £11.2 billion profits has once again brought the various issues with the conduct and profitability of banks to the forefront of public conscience. But what can you do if you are tired of giving banks your money, tired of huge banking bonuses and ultimately wish to burn your bridges with the entire banking sector? Join a credit union.
Credit Unions are locally run organisations where customers can save and take loans. Because they are a co-operative organisation, anyone who chooses to put money into a savings account effectively owns part of the business. Therefore, unlike banks any profits made from loans' interest and joining fees is paid back to members in the form of dividends. Instead of using the money you save in investment banking, Credit Unions use it to offer low fixed interest loans to their savers who are in need. Since all the customers are members of your community this means that your money is being used to help improve the livelihood of people in poverty on a local level. Credit Unions are also regulated by the FSA (Financial Services Authority) and as such, the safety of your savings is guaranteed.
When a customer wishes to take out a loan there are no fees, nor is there a minimum loan amount and any issues which arise with payment can be discussed and a flexible solution which suits the customer can be found. There is also no penalty for early payment with interest calculated from the reducing balance of the loan.
The main downside to saving with a Credit Union is that you are unlikely to get high interest on your savings, although this does vary from each Credit Union to the next, with some now even offering ISAs (Individual Savings account). Another issue stems from the fact that each Credit Union is different and thus you can only withdraw money from your local one. This means it is still necessary to hold a current account with a bank or building society for your daily needs. In many cases one day's notice is required to withdraw any large amount, meaning you may not be able to get hold of your money exactly when you need it.
On the whole though, Credit Unions provide a refreshing, ethical and community led approach to savings and loans and with more and more people becoming increasingly disillusioned with banks, they could be a force to be reckoned with in years to come.
For more information on where to find your local Credit Union and which services it offers see:
here
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