12 February 2012
This information applies to England, Wales, Scotland and Northern Ireland
A credit union is a local financial co-operative, owned by its members, which offers some of the financial services you get at a bank or building society. For example, you can save money or get a loan at a low interest rate.
This page tells you about saving with a credit union, including:
For more information about borrowing money from a credit union, see Credit union loans.
To be part of a credit union you have to share something in common with other members, called a common bond. This can be something like:
If one member of your family is already a member of a credit union, other relatives living at the same address can usually join too.
A credit union savings account may be a good option for you if you can only afford to put a small amount of money away each week or you can only save now and then. Unlike some bank and building society savings accounts, you can put as little money as you like into a credit union savings account and you don’t have to save regularly. You just need £1 to open your account.
Many credit unions set up convenient local pay-in points, such as local shops or community centres, so you don’t have to make a special trip to a bank or building society.
As a reward for saving with a credit union, you get a dividend that is paid once a year. This is likely to be 2 or 3 per cent of the amount of money you have saved. Some credit unions may pay higher rates.
All the money you save in a credit union savings account up to the value of £85,000 is protected by the Financial Services Compensation Scheme. This is a fund which may be able to help if a company offering financial services goes bust or stops trading. For more information about the fund, go to: www.fscs.org.uk.
Credit unions offer good value loans but you may have to be a reliable saver with the credit union before you can borrow from them.
For more information about borrowing money from a credit union, see Credit union loans.
In addition to straightforward savings accounts, credit unions may offer a variety of savings products, including:
For more information about ISAs, see Individual Savings Accounts (ISAs).
For more information about the Child Trust Fund, see Benefits for families and children.
You can get information about credit unions from the Association of British Credit Unions (ABCUL) website at www.abcul.org.uk or the ACE Credit Union Services website at www.acecus.org/pages.
In Scotland, you can get information about credit unions by checking the website of the Scottish League of Credit Unions members at www.scottishcu.org.
For more information on other types of savings that you can compare with credit union savings, see Ways to save.
For more information about money and finances on Adviceguide, see:
The Money Advice Service is a free, independent service. Their website has lots of useful information on the different kinds of savings available, including information on saving with a credit union. Go to: www.moneyadviceservice.org.uk.
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