Frequently asked questions about credit unions!
WHAT IS A CREDIT UNION?
It is a community owned 'bank'. You can make regular savings no matter how
small, into your account AND take out very low cost loans should you ever
need to!
Members who agree to save together, create a common fund from which it's members
can borrow at competitive rates. It is non-profiting making, any surpluses
being used for the benefit of its members.
WHO RUNS IT?
A
credit union is owned and managed by its members. It is a non-profit making
community enterprise, run by local people for the benefit of local people.
WHO CAN JOIN?
Everyone who lives or works within the county of Denbighshire, south of the A55, and any member of their family who lives with them, can join by paying a membership fee of £1 and opening a Standard Share account. There is a Junior Savers Section for those under 16 years of age.
IS MY MONEY SAFE?
YES! The credit union is insured against theft and fraud and is regulated by the Financial Services Authority (FSA). There are strict legal guidelines on how it is run, with regular audits and controls.
In addition, since 2nd July 2002, all credit unions in this country are supported by a national compensation scheme through the FSA which currently supports all banks and building societies - in effect you will be compensated if the credit union goes out of business. This is something we do not contemplate with our credit union but it is a tremendous support for our members. Your first £2000 is fully covered.
Further information is available from our Credit Union or direct from:
- Financial Ombudsman Service
- South Quay Plaza
- 183 Marsh Wall
- London
- E14 9SR
Phone: 0845 080 1800
Web site: www.financial-ombudsman.org.uk
HOW DO I SAVE?
Savings are totally flexible so you do not have to save the same amount each time, but we do ask you to save regularly, however small the amount. Savings can be made at collection points, which will be established throughout the county; or at our registered office, or by standing order or by payroll deductions arranged with their employer. The credit union is there to help you make regular savings so that they build up into a sizeable sum.
CAN I WITHDRAW MY MONEY?
Yes, but we may need 7 days notice. Most members however prefer to keep their savings intact and growing, taking out a loan instead. This ensures they remain eligible for future loans and dividends. They also keep their life assurance benefits intact.
DO I GET ANY INTEREST ON MY SAVINGS?
All members own the credit union and share in its success. Instead of interest being paid a dividend is given at the end of each year. The more savings that you have, the more dividend you earn. At present the law allows credit unions to give up to an 8% dividend on your savings.
DO I HAVE TO TAKE OUT A LOAN?
No, you can use the credit union just to save.
WHO CAN APPLY FOR LOANS?
Anyone who is a member, is 18 or over and has been saving regularly with the credit union for at least 3 months, may apply for a loan. The credit union is there to get you into a savings habit. If you can show that you can save regularly it indicates that you can repay a loan regularly
HOW MUCH CAN I BORROW?
Loans are granted to members on the basis of their savings record, their ability to repay and according to the loans policy of the credit union. A first loan can be up to £500 paid back over 1 year. Subsequent loans could be longer if you have a good repayment record.
HOW MUCH DO LOANS COST?
Compare
our rates with anywhere else! The law does not allow us to charge more than
2% per month (26.8% APR), AND there are no hidden costs or extra charges.
For example if you borrow £100 over 12 months you pay back £112.69
(compare that with a bank loan!). And of course all that money goes back into
your credit union.
CAN I CHOOSE THE REPAYMENT PERIOD?
It's up to you to decide how much you can afford to pay and for how long. First loans have to be paid back over a maximum of 12 months but subsequent loans may be repaid over three years, so your loan could be for two weeks or for a year or more.
ARE THERE ANY PENALTIES IF I WANT TO PAY OFF MY LOAN EARLY?
No, none at all.
WHO WORKS IN THE CREDIT UNION?
Credit unions are run by volunteers drawn from their members. If you want to be involved there is always something interesting to help with. There is training available for all volunteers. The more complicated the job in the credit union the more training there is available. As a volunteer you can also get credit union qualifications that will help you with your job prospects.
IS MY BUSINESS PRIVATE?
Totally. All officers and collectors abide by strict rules of confidentiality.
WHAT ABOUT INSURANCE?
Members' savings and loans are covered by FREE insurance (depending on age). If for example you have an outstanding loan and you die, your family does not pick up the debt. This insurance cover is considerably more expensive with other financial providers. Banks for example can charge up to 20% more for insurance on their loans. Watch out for those hidden costs. With the credit union you are secure in knowing that there are no hidden charges.
HOW DO I BECOME A MEMBER?
It's easy; just visit the office or one of our collection points during opening hours. It costs £2 to join and you can then open up a savings account with as little as a pound, and start enjoying all the benefits of being a member.
WHERE DOES THE CREDIT UNION INVEST MEMBERS SAVINGS?
Members' savings will be placed on deposit at banks or building societies. Our Credit Union invests only with ethical investors.
