Credit unions are organizations that focused on their members. These organizations help people save and borrow money. Credit unions have similarities to banks because they both offer financial products and services. Like banks, credit unions have savings and checking accounts, credit cards, and loans.
Here are some benefits of partnering with a credit union:
- Credit unions can be big or small, they can have thousands of customers while some have less. You can find one to fit your personal needs.
- People who use services from a credit union could live in the same area, work in the same company or go to the same church.
- Credit unions are regulated by the Financial Conduct Authority and the Prudential Regulatory Authority. There is a savings protection limit for the customers. If they have more money than the limit, it means that some of their money will be at risk if the institution fails.
While credit unions are similar to banks, they differ in two ways. One distinct difference is that credit unions are not for profit organizations. Some can offer higher interest rates on savings accounts. and lower interest rates on credit cards and loans. The second distinction is that credit unions are institutions that are member-focused.hey are a cooperative which is owned and operated by the members. Your first deposit as a member will make you a part of the credit union. and will give You will have a voice in the credit union’s decisions.
Why go to a credit union when borrowing money?
Credit unions have three main goals:
- to provide loans with lower rates
- to assist the member with their finances
- encourages the member to save up regularly.
These credit unions act with their member’s interest in mind.
To get a loan in a credit union, you will need to be a member first. You will also need to build up your savings. When you borrow money from a credit union, most will charge you an average of one percent interest per month. Some unions will charge less, others will charge more but there’s a law that they cannot charge more than three percent per month. Another good thing about getting a loan in a credit union is if you repay the loan early, there will be no penalties. There’s also a free life insurance with credit unions at no extra cost. This means that if you die before you have repaid the loan in full, the balance will be paid off for you.
How do you borrow from a credit union?
The first thing you need to do is to find a credit union in your area to join. You will need to provide identification when you join.
How do you pay back the money you’ve loaned
There are different ways you can pay back your loan. There will be some credit unions that might not offer these methods but most do.
Here are some ways:
- Face-to-face direct payment
- Payment by direct debit from your bank account
- By salary deduction – this is if your employer has links to your credit union
- Payment through your credit union benefits – some credit unions take direct payment using your benefits.
If you are looking to borrow money from a credit union, apply to a credit union that is near your area. Find out what loan products they are offering and what interest rates are available. Or better yet, check out Calcite Credit Union.