A helping hand
While the big banks have been noisily raking in profits and depriving us of decent interest rates and the smaller, traditionally cooperative banks, like the er Cooperative, have become paralysed by inefficiency and incompetence, the credit unions have been quietly getting on with helping people to borrow and save. One of the gentlest, most cooperative and unassuming of our financial institutions, they’ve been happy out of the spotlight.
But now, according to Barry Roberts, general manager of North Wales Credit Union, they could do with a little bit of support. The Welsh credit unions have got together and launched a campaign to increase membership from a paltry 2% of the population to a more healthy 6% by 2020.
“We rely on middle income earners to invest in credit unions, otherwise they simply wouldn’t be able to run,” explains Barry, “And this is where one of the biggest challenges lies. Many people who save are still under the false impression that a credit union is ‘the poor man’s bank’, only available to those in financial hardship. We need to correct this misunderstanding.”
Traditionally credit unions have been the sort of institution that people turn to in times of trouble, or when no one else will consider lending them any money. These days, because bank interest rates are so lousy credit unions are becoming seen as a decent place to save money as well as to borrow from. Credit unions don’t usually pay interest on savings, instead, they share the profits they make from investing people’s savings by paying out dividends to their customers. (Now there’s a thought.) Depending where you live and work (credit unions are traditionally local affairs) it is possible to attain dividends of between 2% and even 8%, which is not to be sniffed at.
Apart from providing savers with a potentially good deal they are, unlike many banks, in the business of encouraging people to save. For example they are quite happy to allow people to pay in as little as £10 a week, which, if you start now, could enable you to save £250 in time for Christmas to help you buy some presents and still have enough left over for a turkey without suffering that gruesome January financial hangover. Equally they are especially good at turning borrowers into savers by refusing to lend people money they cannot afford to pay back and persuading them to keep on paying money in once their debt has been cleared. But as the old song goes, you can’t have one without the other. In order to help those without any money they need to attract a few more customers who have some. So, if you want to build up some savings in time for Christmas, and would like to do so in a way that enables other people to enjoy their Christmas without heading for those horrible Pay Day loan shops, why not investigate your local Credit Union. You can find out more here.
Posted by Amanda Blinkhorn