There 57,000 Credit Unions in 105 countries around the world, helping 217 million members take advantage of affordable financial services. Stevenage Credit Union is just one of them, having been in operation for over 20 years. They are supported by Stevenage Borough Council, and they accept members from all over Hertfordshire, offering a local and friendly service. Unlike high street banks, Credit Unions are run solely for the benefit of their members. They offer a more flexible and ethical way to save or borrow.
Credit Unions operate by using members’ savings to make loans to their members using the interest from these loans to offset the cost of running the Credit Union. Depending on how much surplus they make, they pay an annual dividend (interest payment) to all members. The core principles are to encourage people in the community to take control of their finances and to save money for unexpected items or special occasions like Christmas or holiday expenses.
The feedback they get from their members is very encouraging. One user commented that ‘being able to save and borrow at the same time, building up a tidy nest egg of savings while paying your loan back means that you can plan ahead for the future’. One member said that the main reason they joined was because Credit Unions offer a local friendly service helping them to manage their money.
Martin Lewis from Money Saving Expert says ‘Credit Unions are a viable, cheaper, non-profit local alternative and should be encouraged’.
Other benefits of joining Credit Unions are that young people can open saving accounts and learn from a young age about the importance of saving. Many employers have taken the initiative to form partnerships with Credit Unions, to promote easy ways of saving and affordable loans, paid directly from payroll, which contributes to improving financial wellbeing of employees.
Credit Unions lend money responsibly by not encouraging people to get into debt, are not-for-profit and are part of the cooperative movement. They are safe, secure, and regulated by the Financial Conduct Authority in the same way that banks are. The Financial Services Compensation Scheme protects all members’ money.