Credit Unions

A growing number of individuals and families throughout the UK are finding it difficult to make ends meet and are having to resort to expense pay-day lending. Credit Unions offer a cheaper, safer and viable alternative.

You can find out more details about Credit Unions below, or visit the Church of England website which has extensive information on Credit Unions.

Our local Credit Unions are Norfolk Credit Union Ltd and Eastern Savings and Loans.

If you need the help of a Credit Union, or wish to help support Credit Unions you can find out which unions you're eligible for here. Different Credit Unions are available depending where you live, what groups you belong to and what work (if any) you are employed in.

What are credit unions?

Credit unions are not-for-profit financial cooperatives. They offer similar services to banks, including savings accounts, loans, and a range of other services to help their members to save and manage their money responsibly.

Unlike banks, credit unions are owned and controlled by their members - the people who use them - and run for their benefit. Volunteer directors are elected from the membership and any profits are shared between members. The emphasis is always on providing the best service to members, not on maximising profits.

Each credit union has a 'common bond' which determines who can become a member, for example people living or working in the same area, working for the same employer, or belonging to the same association, or a combination of these.

Credit unions have a number of clear aims and values, including:

- Encouraging members to save, as well as borrow;

- Offering loans at fair and reasonable interest rates, taking into account what people can afford to repay;

- Training and empowering members to use money wisely and make informed choices about their finances;

- Using members' savings efficiently and for the mutual benefit of members and the local community;

Credit unions are authorised and regulated by the Financial Conduct Authority and all money invested in a credit union is protected up to a total value of £85,000 per member.

Facts and statistics

There are nearly 400 credit unions in the UK with assets of nearly £1 billion.

Over 1 million people are members of credit unions. The aim is to double this by 2017 as a result of the Credit Union Expansion Project.

The sector is growing fast, but is still relatively small by comparison with some other countries, such as Ireland where 70% of the population are members of credit unions, compared with less than 2% in the UK.

More than 90% of the British population is able to join a credit union because of where they live. Others are eligible through their employer.

Credit unions have been shown to be best value in the UK market for loans up to about £2,000, and many will match bank rates for higher value loans as well.

Around the world there are 56,000 credit unions serving 200 million members in 101 countries

What is the problem that credit unions can help to address?

The use of high-cost credit, and payday loans in particular, has grown very rapidly in recent years fuelled by stagnant wages, rising living costs and limited access to mainstream sources of credit. According to a recent survey by Which? (published in June 2013), one million households in the UK had taken out a payday loan in the last month, in many cases simply to make ends meet: 38% of the loans were used to pay for food or fuel, while 24% were to repay existing payday loans.

Customers are attracted by the quick and ready availability of payday loans - money can be deposited in your account within 15 minutes from the major online operators. But, the interest rates on these loans are very high - frequently in excess of £30 for a 30-day loan of £100, which is equivalent to an Annual Percentage Rate (APR) of 4-5,000%. It is not surprising that many borrowers, who are already in a financially precarious position, are unable to meet the repayment costs and can soon find themselves in a crippling spiral of debt.

What can churches do to support credit unions?

'We welcome the support of the Archbishop of Canterbury and the Church of England for credit unions. The wide community reach of the organisation and the skills within its congregations can help raise awareness of the benefits of credit unions and help them to grow.'
Mark Lyonette, Chief Executive, Association of British Credit Unions Limited

Churches (and their members) can get involved in several ways that suit their range of resources and skills. The links below take you to pages with more detailed information:

The simplest place to start is to do some fact-finding: is there a credit union that covers your parish?
Credit unions have fairly low recognition, so raising awareness of their presence in the community is key to encouraging more people to join.
Individuals and corporate bodies (including churches) can invest money as savings.
A local credit union may benefit from using your church premises as an access point for people in the community.
Members in the congregation may have useful professional skills to offer, such as financial management or IT.
A new Churches' Mutual Credit Union will be launched in the near future.

'Our faith in Christ calls us to love the poor and vulnerable with our actions. That is why the Church must be actively involved in supporting the development of real lending alternatives, such as credit unions. This is not an optional activity, but a fundamental part of our witness and service to all God's people. It is also a chance for us all to redevelop and stimulate local, relational forms of banking focussed on serving the whole community.'
The Most Rev. Justin Welby, Archbishop of Canterbury

Why should Church support Credit Unions?