Date: 20 January 2012

If you're on a low income, or have been turned down for a loan by a high street bank, you may have thought of taking out a pay day loan or even turning to a loan shark. Credit Unions can offer a better alternative, with loans at much lower interest rates. A Credit Union is a local group of people who've pooled together their savings, so that they can borrow from the union at lower interest rates. Some unions can also offer you a loan as soon as you join, even if you've not yet been saving with them.

Up to now, you had to have something in common with the other union members before you could join. This was typically working or living in the same local area, or being part of the same church, trade union or other organisation. Each union shared one common bond.

However, there are new rules about how Credit Unions can work. The new rules mean that Credit Unions will now be able to:

• allow more groups of people to join the same union, although each group will still have to share its own common bond
• let you stay with your union if you change jobs or move away from the area
• pay a guaranteed rate of interest on your savings instead of paying a dividend
• provide services to community groups, businesses and co-operatives, not just to individuals

For more information about Credit Unions and how to find your local one, go the Association of British Credit Unions website at www.abcul.coop.