About Credit Unions

Everything you need to know about Credit Unions.

What is a Credit Union?

The first credit union in Britain began trading in 1964, and over the last 50 years, credit unions have grown to provide loans and savings to more than 1.2 million people across England, Scotland and Wales.

Credit unions have a proven track record across the world. In fact, 217 million people are credit union members in 105 different countries.

A credit union is a financial co-operative which provides savings, loans and a range of services to its members. It is owned and controlled by the members.

Each member has one vote and volunteer directors are elected from the membership, by the membership.

Credit unions are owned by the people who use their services, and not by external shareholders or investors. So the emphasis is always on providing the best service to members – not maximising profits.

Membership of a credit union is based on a common bond. This can be working for a particular employer or in a particular industry, or simply living or working in a specified geographical area which could be as small as a village or as large as several local authority areas.

Credit unions come in all shapes and sizes. Whether you’re looking for a credit union with online and phone banking, a payroll partnership with your employer, a local branch or service point you can walk into – or a combination of all three – there’s a good chance you’ll find the credit union you’re looking for to meet your needs.

What services do Credit Unions offer?

Credit unions offer a wide range of financial products and services to suit consumers from all walks of life.

All credit unions offer savings accounts and loans. Many offer a wide choice of additional products such as junior savings accounts, Christmas savings accounts, prepaid debit cards, insurance products, cash ISAs and in some cases even mortgages.

There’s no “one size fits all” rule in credit unions, and there is great diversity in the sort of service and access points that different credit unions offer in order to meet the different range of consumer preferences and expectations.

Some credit unions will run one or more branches or service points to offer a face-to-face cash service. Others will exclusively offer an online or phone banking service. Some credit unions have developed an app for mobile devices and make instant loan decisions, while others prefer to interview all prospective borrowers.

Whatever kind of credit union you’d prefer, there’s a good chance you’ll find the one you’re looking for.

Credit unions encourage all their members to save, and as well as a basic savings account, many can offer a range of options including Christmas savings accounts, notice accounts with higher returns, junior savers’ accounts, and even cash ISAs.

Members can pay in directly by payroll deduction or through benefit direct accounts; through retail payment networks such as PayPoint and PayZone; by standing order or direct debit, or in cash at local offices and collection points.

As the credit union’s only shareholders, a successful year for the credit union will see members receive a dividend on their savings – which could be as high as 3% in some cases.

And there’s no need to worry about the money you save in a credit union, as all deposits in a credit union are protected by the Financial Services Compensation Scheme up to the value of £75,000 per person – exactly the same level of protection as savings in a bank or building society.

Credit unions offer loan products suited to your individual needs and at rates you can afford.

Because credit unions are focused on serving their members rather than maximising profits, credit unions are often able to the sort of smaller, shorter term loans that many banks simply do not offer – and for which other specialist lenders charge very high interest rates.

The maximum any credit union will ever charge for a smaller loan is 3% per month on the reducing balance, which works out as 42.6% APR. This means the most expensive credit union loan in Britain is still eight times cheaper than a payday loan charged at their cap.

Of course, the vast majority of credit union loans are made well below the maximum interest rate. A Government-commissioned study in 2013 found that credit unions offer the best value to consumers on loans up to £2,000, and some credit unions will charge interest rates of 5% APR or even less for larger loans of over £5,000.

Why use a Credit Union?

There are many great reasons to join a credit union
  • Credit unions help you save regularly, borrow responsibly and keep on top of your finances.
  • Credit unions make it easy to save – even a small amount saved each week will soon mount up.
  • Many employers have partnerships with credit unions which allow staff to save and repay loans direct from payroll.
  • As co-operatives, credit unions share their profits with their members. This often means savers will receive a dividend on their savings every year, which could be as much as 3%.
  • Credit unions offer affordable loans, which can range from shorter term loans of a few hundred pounds to much larger loans for holidays, buying a car, home improvements or even a mortgage.
  • Credit unions are often able to offer credit to people whose circumstances might mean they struggle to get a loan from other lenders.
  • Credit unions offer very competitive rates on loans of all sizes. For smaller sum loans, interest on credit union loans is always much lower than that charged by doorstep lenders and payday lenders.
  • All money saved in a credit union is protected by the Financial Services Compensation Scheme up to the value of £75,000 per person – exactly the same level of protection as savings in a bank or building society.
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Joining a credit union

To become a credit union member, you need to visit or call your chosen credit union to confirm what information you need to join, they will also advise you of the joining process as this may differ between credit unions.

Many credit unions now have a website, with an increasing number now also offering online application services for loan and savings accounts, plus online banking and account management services via websites and mobile apps.

Anyone can become a member, however you must share a ‘common bond’ with other members such as:

  • Live or work in the same area
  • Work for the same employer as other members
  • Belong to the same church, trade union or other association
  • Organisations, as well as individuals, can now join up

You can use this website to search for a credit union, based on information that be important to you, such as home postcode, the company you work for, certain organisations or associations that you may belong to etc.

Frequently asked questions

Is my money safe?


All money saved in a credit union is protected by the Financial Services Compensation Scheme. If you have savings with them these are protected up to the value of £75,000

Who are credit unions regulated by?

Credit unions are authorised by the Prudential Regulation Authority and regulated by the UK Financial Conduct Authority.

How can I deposit and access my money?

You can deposit savings at local branches, shops, collection points, by direct debit or directly from your wages. Accessing your money can take the form of a current account card or pre-pay card but as credit union services differ you should contact your chosen credit union directly to find out more.

How much interest rate will I get?

Each credit union has its own interest rates so you should contact your chosen credit union direct to discuss in detail.

Who can become a member?

Anyone can become a member, however you must share a ‘common bond’ with other members such as:

  • Live or work in the same area
  • Work for the same employer as other members
  • Belong to the same church, trade union or other association
  • Organisations, as well as individuals, can now join up