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United we stand. Or in the case of credit unions: United we pay a lot less interest on our loans. This is one of the joyous perks of joining the financial group hug that is a credit union. But take heed, they don’t cosy up with just anyone.


What is a credit union?

Members deposit their money into an account, in much the same way as a savings account. Before anyone can take out a loan, they must have saved a certain amount.

Credit unions are not-for-profit organisations, which explains why they can afford to charge such low interest rates. All members will have something in common (such as location, trade union etc.) so not everyone can join one.


What are the benefits?

Credit unions make decisions based on the interests of their members, so they won’t lend to anyone who can’t pay the loan back. Because everyone who applies for a loan is a member, it’s easy for the credit union to make affordability checks.

The maximum amount of interest on a credit union loan is set at 3% per month. This is far below short term loans, which characteristically charge 25% per month.

If members find themselves in financial difficulty, they are offered support and advice to help ensure they don’t get into difficulty again. Unlike many lenders, a credit union doesn’t charge a fee for early repayment.


Getting a loan

Getting a credit union loan isn’t as straightforward as getting a personal loan. You have to become a member and show that you can save money for a period of time.

Also, not everyone can join a credit union; there may not be one open to you in your area, profession or other stipulation.

Once you’ve joined, it still requires a number of months of saving before you can take out a loan, so this option isn’t for people who need money in a hurry.


Where can you find a credit union?

You can find your nearest credit union by visiting or by calling the Association of British Credit Unions.

Taking out any form of credit comes with risks. Always weigh up the risks before borrowing, even from a credit union. If you feel like you need advice first, take a look at these sites:

With an online web chat service, you can talk to someone immediately to discuss your options.

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