All about Credit Unions

Posted on July 18, 2024

Credit Unions provide loans, savings accounts, current accounts and other services to their members. They are designed to help the community rather than make money, if they make a profit it is shared with everyone who has an account. Credit unions have a proven track record across the world. In fact, 217 million people are Credit Union members in 105 different countries. Credit Unions have grown to provide loans and savings to more than 1.2 million people across England, Scotland and Wales.

What can credit unions help with?

Credit Unions are local financial cooperatives, that are able to offer loans at low interest rates, as the interest is paid on the declining balance. For example, a £300 loan over 6 months, from Eastern Savings & Loans Credit Union will only cost just over £30 in interest, whereas some of the other short-term lenders will charge over £200 in interest. Credit Unions also offer a safe place to save, with instant access savings accounts, and a range of other financial products. Here at Eastern Savings & Loans Credit Union, we also offer Christmas Savings accounts, a current account (called the Engage Account), and Junior Savings too.

Are Credit Unions worth joining?

If you’re frustrated with unresponsive customer service and want your money with an organisation you have an input in, a credit union might be the best place to put your money. If a Credit Union makes a profit it is shared with everyone who has an account, rather than stakeholders like the banks. Also everyone who has an account also has a say in how the Credit Union is run, and can vote for how much profit is shared out, and other organisation decisions at the Annual General Meeting each year.

It’s tough to beat a friendly, community-focused financial institution offering lower interest rates on small loans, better customer service and gives you a voice on how the organisation is run.

What type of savings accounts do they do?

Our dividend savings account is ultra-flexible, allowing you to save weekly, fornightly, monthly or whenever you can. You can make deposits via standing order, faster payment, in the branch or via Pay Point locations. You can even save directly from your wages or while repaying a loan via Direct Debit!

Your savings are also instant access, you can make withdrawals by calling us at the office or using our online banking service. All withdrawal requests are processed within 2 hours, during our working hours.

Our Dividend Savings account also includes built-in life insurance, this means that if you die your savings are doubled and can be paid to a person you specify, (subject to certain Terms and Conditions).

Is my money safe with a Credit Union?

All credit unions are authorised and regulated by the Financial Conduct Authority (FCA) and also covered by the Financial Services Compensation Scheme (FSCS) up to £85,000. Here at Eastern Savings & Loans, you can hold a maximum of £20,000, so all of it will always be covered.

Are Credit Unions just for people who are struggling financially?

No, credit unions are for everyone. At Eastern Savings & Loans we have members across a wide range of financial circumstances. Some people use us to save, or as their main bank account, as they like benefiting from the profit we make, and supporting the local community.

We offer products to reflect our different members’ situations, we have small loans from £300 which most high street banks will not do, or Payday Lenders will charge a lot in interest for. We also offer loans up to £4,000 for our members who like the option to save at the same time they repay their loan. Members can also make additional or early repayments without any extra fees, (it actually saves you money in interest), and support their local community.

Can I get a loan straight away with a credit union?

Each Credit Union is different, and some offer lower interest rates to members who have saved first. At Eastern Savings & Loans, you can apply for all our loans straight away.

The interest rates vary depending on the loan amount and each person’s financial circumstances. However, they are considerably less than many other providers for smaller short-term loans, and all our loans come with added benefits too, with no charges for early repayments, and free insurance for your loan, (subject to certain terms and conditions) no matter what size loan you have.

One of the loans we offer is called the Child Benefit Savings & Loan Plan, which is a small loan between £300-£500. The repayments are made from the member’s Child Benefit which gets paid into their credit union account. The repayments can be from £12 per week, and we encourage our members to save some of the remaining Child Benefit. This helps local families spread the cost of School Uniforms, School Trips, clothes, and additional expenses that can affect families. By saving while repaying the loan, you will have a pot of money for upcoming expenses and help support your financial well-being.

Do Credit Unions do credit checks?

Like other lenders, most Credit Unions run Credit Checks as part of their loan processing. At Eastern Savings & Loans we do run Credit Checks, but each application is looked at by our Loans Team, and is not assessed just on Credit Score. We understand that some people have had issues in the past, and need a little bit of help now. We offer smaller amounts if we are unable to offer the full amount applied for, rather than just saying no. In the cases where we can not lend at all, we provide bespoke signposting support to help our members improve their situation so they will be able to access credit in the future. A good repayment history with us also can help improve your credit file, as we report to credit reference agencies.

Do Credit Unions offer other products?

Some credit unions offer a bank account facility, and it operates very much like a bank account. You can have your salary paid in, set up direct debits and standing orders from the account, take out money at cash machines, and use the debit card in shops and online. Most credit unions will charge you for the account. This is the cover costs as they are not-for-profit. At Eastern Savings & Loans we charge £3.50 per month for our Engage Account. The account also comes with Cashback Rewards at a range of national retailers and many members receive more in rewards each month than the account costs.

We also have online and telephone banking services, online loan applications, a Christmas savings club and children’s savings accounts.

You can find out more information about Credit Unions in the UK via the Find Your Credit Union Website, Money Helper or Citizen Advice.

How can I find a Credit Union?

Check out Find Your Credit Union. It helps you find the nearest Credit Union to you. You just need to put in your details to the search box, and a list will come up. If you live or work in Suffolk, Norfolk, Cambridgeshire, or North and Central Essex, you can join ESLCU.

We also can accept membership if you work for:

• East of England Co-operative Society Ltd
• East Suffolk and North Essex NHS Foundation Trust
• Freebridge Housing Association

or  are tenant of:

• Flagship Housing Association
• Orbit Housing Group
• Riverside Housing Association

but you live just outside the counties listed above.