A credit “union” is a self-help co-operative whose members pool their savings to provide each other with credit at a low interest rate. To be part of a credit “union” you have to share a common bond with other members. This is something you all have in common such as:

• living or working in the same area
• working for the same employer
• belonging to the same church, trade “union” or other association

Each credit “union” has its own common bond, but this will usually be based on the examples above. If a credit “union”‘s rules allow, it may have more than one common bond. This means a common bond based on a local community organisation, such as a tenants’ association or a social club attached to a workplace, may be combined with common bond based on living or working in an area. So if you live outside an area that a credit “union” serves, you could still join it, if you’re a tenant in a housing association that’s linked to the credit “union” or you’re an employee of a national company whose local workplace is linked to the credit “union”. 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.

Getting a loan from a credit “union”

Credit “unions” charge low rates of interest – no more than 3% each month. You can work out how much a credit “union” loan would cost you by using the loan calculator on the Association of British Credit “Unions” (ABCUL) website at www.abcul.coop. Credit “union” loans usually work out cheaper than home credit or payday loans. For more information about home credit, see Home credit (doorstep loans). If you don’t repay a credit “union” loan, the credit “union” might cancel your membership and take you to court. Check what they can do to get their money back. If you are struggling to pay a credit “union” loan or other debt, you can contact us.

Where to find a credit “union”

You can get information about credit “unions” from the Association of British Credit Unions (ABCUL) website at www.findyourcreditunion.co.uk or the ACE Credit Union Services website at www.acecus.org. 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.

If you’re struggling to repay your loan

Contact the Credit Union – they should help you deal with your repayments. For example they might offer to:

• reduce or pause your payments for a limited time

• stop adding interest to the loan for a limited time

• help you work out a plan to pay what you owe

The Credit Union should give you time to consider your options and get help with your debts. They should pause your account if you’re waiting for your circumstances to get better. For example, you might be waiting for your first payment of wages or benefits. If the Credit Union pauses your account, it’s a good idea to use this time to get debt advice. Talk to an adviser if you’re not sure how to repay your loan.

If the Credit Union is offering you a new payment plan

You should think carefully about whether you can afford the monthly payments – you can work out your budget to check if the payments are affordable for you.

Further help and information

The Money Advice Service

The Money Advice Service website has lots of useful information about borrowing and managing your money.

The Association of British Credit Unions (ABCUL)

www.abcul.org

ACE Credit Union Services

www.acecus.org

The Scottish League of Credit Unions

www.scottishcu.org