The modern credit union is a community based, non profit financial organisation. Rather than consisting of bankers, investors, and city professionals, though, a credit union is made up of neighbours, colleagues, fellow church members, or others that are associated with you in some way. The aim of a credit union is to encourage regular saving from its members and this is one of the biggest benefits of joining a credit union, although there are other benefits too. You can also borrow money using credit union loans and some groups now offer what are equivalent to current accounts.
Basic Credit Union Saving Facilities
The basic principles of a credit union saving account are similar to standard bank savings accounts. The bigger unions even have branches across the country so that you can make payments quickly and easily whenever you like, while some offer a range of associated products to complement your saving regimen. Consider the ways in which you will be able to pay money into your savings account as well as the projected dividend payment as well as other factors concerning the running of your new credit union to be sure that you choose the right one for you.
Credit Union Requirements
The credit union must put a certain amount of money aside every month to ensure that it cannot go bust. Anything that is left over can then be used to further improve the running of the credit union or to repay savers, in the shape of annual dividends. The money that a credit union makes is from interest paid on loans made to other members of the union. When you join and save with a credit union you could be helping out a neighbour, colleague, or fellow group member.
Dividends Vs Interest Repayments
Where credit union savings do differ from bank savings accounts is how they repay you for saving. A bank account may provide you with interest on the amount that you save over the space of a year whereas a credit union will pay dividends. The size of the dividend you receive will depend on a number of factors including how much money you have saved and the performance of the credit union itself. You can expect to receive anywhere between 0% and 8% as a good guide.
Rules And Regulations Protect
Credit unions are protected by financial rules and regulations to ensure that member money is secure. The left over money from the loan interest, after paying for the running of the credit union, cannot be invested in anything that is considered too high risk. The credit union is governed by the Financial Services Authority, or FSA, who are the same people that govern banks and other high street lenders and banks too.
Life Savings Insurance
With every savings account you also receive life savings insurance at no additional cost. This means that if you die then your savings will be paid to whoever you have nominated as the recipient. In some instances, the recipient may receive up to twice as much as you have saved providing them with a windfall which can be used to help pay for funeral costs or for any other purpose they see fit. Ensuring that your savings are safe is important, especially in today’s economic climate.
Credit Union Savings
Credit union savings are protected by the Financial Services Compensation Scheme in the same way a standard savings account is protected. You can enjoy up to £85,000 protected repayment. With this protection it means that you can save money and be confident that it is safe, no matter what happens.