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The new credit union boom

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  • The new credit union boom

    The new credit union boom

    Dan Hyde, This is Money
    2 September 2008

    Guide
    Customers disillusioned with traditional banking in the wake of the credit crunch are turning to credit unions in search of a safer, more ethical place to save and borrow, it has emerged.

    Some big banks took too many risks, lending aggressively during the boom years. Their actions may yet provoke a UK recession and credit unions look set to benefit.


    'Credit unions are a very good way of keeping banking in check,' says Mark Lyonette, chief executive of the Association of British Credit Unions Limited.
    'Since the Northern Rock crisis, we've seen a lot of people gravitate towards the neutrals of the banking industry and there are already a number using these schemes to great benefit.'

    Credit unions work as 'neutral' organisations in which customers and shareholders are one and the same, united through a 'common bond' such as location or employer.

    'This structural advantage means credit unions are able to serve their members exclusively,' says Lyonette.

    'With conventional banks there is a difference of interest between shareholders and customers; by steering clear of this, credit unions are able to avoid pitfalls such as those the banks have experienced with the credit crunch this year.'

    Several leading UK credit unions have enjoyed surging interest in the last few months as growing numbers of individuals struggle to finance their day-to-day expenses.

    Leeds City Credit Union, which now has over 20,000 members, is one of those that has prospered.

    'The banks are increasingly pointing people in our direction as the credit crunch bites because we offer a more rounded assessment of credit rating than banks do, which can really help individuals,' says James Hook, head of marketing at Leeds City.

    A more recent development for credit unions, though, is the interest being shown from more affluent sectors of society, many of whom are making a lifestyle choice in the search for a 'more honest' form of banking.
    'Concern for ethical issues has always been there for some, but it is now becoming more widespread,' says Karen Fraser, a leading consumer research strategist.

    Hook agreed: 'The current economical climate means that we are able to promote ethical financing, as all the money that comes in [to the union] goes back out into the community,'
    A traditional drawback with credit union borrowing has been the rates offered. Unions often struggle to compete with bank loans and offers vary significantly between providers. Most charge a maximum of 1% interest per month on the money they lend to their members, although by law this can be up to 2% a month, which would work out at between 10% and 24% APR. Currently, many rates are around 13%.

    http://www.thisismoney.co.uk/saving-...6&in_page_id=7

  • #2
    Re: The new credit union boom

    If people are looking seriously at this they need to search for a suitable Credit Union and make sure they are registered with the FSA.

    A search for your local Credit Union can be done via this site ABCUL
    Any opinions I give are my own. Any advice I give is without liability. If you are unsure, please seek qualified legal advice.

    IF WE HAVE HELPED YOU PLEASE CONSIDER UPGRADING TO VIP - click here

    Comment


    • #3
      Re: The new credit union boom

      The credit union where I live has gone into liquidation. I wonder if more will follow.

      LavenderRose

      Comment


      • #4
        Re: The new credit union boom

        Originally posted by LavenderRose View Post
        The credit union where I live has gone into liquidation. I wonder if more will follow.

        LavenderRose
        That is a such a shame.

        Comment


        • #5
          Re: The new credit union boom

          There is a new credit union opening in Kent, for anyone looking in that area. Its just waiting for authorisation from the FSA, and will open in January 2010. Hope its ok to post the link, if not, my appologies.

          http://www.kentsavers.co.uk/index.asp

          Comment


          • #6
            Re: The new credit union boom

            Here's a Swedish CU with an interesting take on lending:

            JAK members bank - Wikipedia, the free encyclopedia

            It was founded in 1931 but only got its banking license in 1997.

            Wouldn't it be nice if Mr. Brown / Mr. Cameron set up a government-backed scheme like this?

            Comment


            • #7
              Re: The new credit union boom

              Just wanted to say i have joined my local credit union in colchester however, the only service they can offer at present is a saving plan and money lending as they dont have enough customers as not many people are supporting their local credit union. If more people joined they would be able to offer more services eg cash cards and direct debits to pay bills making them cheaper so i urger everyone to join their credit union and never again get another bank charge and have the ability to borrow money at an exceptionally low interest rate.

              Do It Today!!!!!!

              Comment


              • #8
                Re: The new credit union boom

                hi

                Some info .

                http://www.thisismoney.co.uk/money/s...-interest.html

                And if anyone wants to find where they can join in addition.

                http://www.findyourcreditunion.co.uk/home

                Peter

                Comment


                • #9
                  Re: The new credit union boom

                  Hi

                  Lets hope the C.U.s get the support they need its been a long time coming.

                  http://menmedia.co.uk/tamesideadvert..._unions_merger

                  Peter

                  Comment

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