Credit unions

A credit union is a profit sharing, democratically run financial co-operative, which offers an easy and convenient way to save and low interest loans to its members. The members own and manage their credit union themselves.

The three main aims of a credit union are:

• To encourage its members to save regularly
• To provide loans to members at very low rates of interest
• To provide members with help and support on managing their financial affairs.

Benefits of joining a credit union

The benefits of joining a credit union are:

• It is an easy and convenient way to save and borrow money
• It is an easy way to receive direct benefit or salary payments
• It offers very low cost loans
• It offers life saving and loan protection insurance at no direct cost to the member
• It's a way to learn new skills.

Credit unions can provide a focal point in a community by bringing people together to work alongside each other for their own benefit and for the benefit of the community as a whole. A credit union can help to revive the local economy by keeping money in the community because loans to members can mean income for local shops and businesses.

How does a credit union work?

A credit union allows members to make regular savings and it can be as little or as much as they wish. These savings then form a common pool of money from which loans are made to members. When members have been saving for a period of time, usually for about 12 weeks, they can then apply for a loan from the pool. Interest on the loan is charged at 1% per month on the monthly balance. This means that a loan of £1,000 over 12 months will cost £1,066 or approximately £66 in interest charges over the year. The average APR (Annual Percentage Rate) on loans is 12.68% (APR).

Who can join the local credit union?

Anyone living or working in the borough of Tower Hamlets is eligible to join the Tower Hamlets Community Credit Union (THCCU). Relatives who live with members are also eligible to become members themselves. The THCCU also has a junior savers club which is open to young people who are 16 years old or under.

How can I join the local credit union?

If you wish to join Tower Hamlets Community Credit Union but you are unable to visit in person, they will arrange for a representative to contact you.

To join or for further information, please contact them on:

Tel: 0800 085 0283 - free phone
E-mail: info@thccu.co.uk

How much do I need to open an account?

There is no charge, otherwise known as an entrance fee, to open an account with your local credit union. However, a minimum deposit of £5 must be made into your account and retained at all times.

How much do I need to save?

You can save weekly, fortnightly or monthly. The amount you save depends entirely on your personal circumstances. You can save whatever amount you can afford from £1 a month upwards. The only requirement is that you save regularly.

Will I get interest on my savings?

As a credit union grows it will declare a dividend at the end of the financial year. It can pay a dividend of up to 8% a year, although it is unlikely that a credit union will be able to afford as much as this during the first few years. Although the credit union in Tower Hamlets began trading in January 2001, it has already paid dividends to members of between 1% and 2% on average.

How soon and how much can I borrow from the credit union?

You need to save regularly for about 12 weeks before applying for a loan and any loan given to you will be related to your savings. The amount you will be able to borrow will depend on how much you need it, what you can afford to repay and the credit union's policies. In an emergency, the credit union may consider a loan application even if the member has not saved for 12 weeks.

Are my savings safe with the credit union?

Your savings are safe with the credit union because they are covered under the Financial compensation scheme which is also used by banks and building societies. This scheme means that your savings will be repaid if the credit union is closed for any reason.

Credit unions are also registered and closely regulated by the Financial Services Authority (FSA). They are also covered by the Credit Union Act 1979 and must be independently audited by external auditors.

Additionally, the credit union is obligated to safeguard its members’ confidential information under the terms of the Data Protection Act.

Is there any insurance?

Both the credit union and your individual savings are insured in the following ways:

• Your savings are insured under the Financial compensation scheme
• Your savings and loans are also protected at no additional cost to you. This means that in the event of death, your nominated beneficiary can receive up to three times the value of your shares from the life savings insurance and in addition the loan protection insurance covers the outstanding amount of your loan
• The credit union has a Fidelity bond which provides cover against fraud and theft
• Credit union assets are also protected by general insurance.

Are there credit unions elsewhere?

Credit unions are well established around most of the world. They started in Germany 150 years ago and then they were set up throughout Europe, North America, Canada, Asia and Ireland. One third of the adults in Ireland are members of a credit union today and credit unions are also steadily increasing throughout the UK both in communities and in the work place especially in British Airways, the police force, the fire service and in local authorities for example.

Useful links

Please find a list of useful credit union websites below:

• Tower Hamlets Community Credit Union website
• The Association of British Credit Unions website
• National Association of Credit Union Workers website
  

Further information

If you wish to join a Tower Hamlets community credit union or you require further information, please use the contact details below:

Tel: 0800 085 0283 - free phone

E-mail: info@thccu.co.uk

You can also visit or contact one of the Tower Hamlets community credit union offices below:

Roman Road Market - Bow Branch
570 Roman Road
Bow
London
E3 5ES

Tel: 020 8983 4582

Bethnal Green Branch
473 Bethnal Green Rd
London
E2 9QH

Tel: 020 7729 9218

Chrisp Street Market (Poplar Branch)
16 Vesey Path
Poplar
London
E14 6BT

Tel: 020 7537 6086

Please telephone before visiting the offices to check the opening times.

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