What is a credit union?
Credit unions are community organisations run by and for their members. Like banks and building societies, they are authorised by the FCA (Financial Conduct Authority).
By law the maximum loan interest they can charge is 3% a month or 42.6% a year APR. This is much cheaper than borrowing from a payday lender. It is also a much safer alternative than a loan shark.
You will need to become a member of the credit union first and usually save an amount before you can borrow.
Benefits of joining a credit union
Saving and borrowing with a credit union may be particularly helpful if:
- your income is low
- you have a poor credit rating
- you only need to borrow a small amount of money for a short while
As a credit union member, your savings are protected and you also have access to affordable loans.