A safer loan, a savings pot, and no loan shark nonsense. Credit unions could be worth a look before we borrow elsewhere.
Credit unions could be about to get a boost.
The government recently announced reforms which will allow credit unions to reach millions more people. That means more of us could get access to lower-cost borrowing and safer savings when money is tight.
And that matters. When the bank says no, it can feel like every door has slammed shut.
That’s when risky borrowing can start to creep in. Payday loans. Doorstep lenders. Someone local offering “quick cash”. It might feel like help at first, but it can quickly turn into a trap.
Before we go near that, there may be a safer option: a credit union.
What is a credit union?
A credit union is a not-for-profit financial co-op. That means it is run for its members, not shareholders chasing big profits.
Members save money with the credit union. That money can then help other members borrow.
Most credit unions have a shared link. That might be where we live, where we work, our employer, our trade union, or another community connection.
The new government reforms are looking to widen those links, so more people can join. That includes allowing some credit unions to serve bigger areas, and letting students, relatives and retired members access more support.
They are not banks, but they can offer useful money services, including savings accounts and loans.
Why bother?
Credit unions are not some tiny backstreet secret. More than two million adults in the UK are members of one.
They can be worth a look if we need to borrow a smaller amount and want to avoid high-cost lenders.
They still have to check what we can afford. So it is not guaranteed cash. But they may be more used to helping people who have been turned away elsewhere.
Some also encourage us to save a little while paying back a loan. That can help us build a small buffer, even if it starts tiny. And that matters. Even a little savings pot can stop the next emergency turning into a panic.
Is our money safe?
Savings with UK-authorised credit unions are protected by the Financial Services Compensation Scheme, the same safety net that covers banks and building societies.
That means eligible savings are protected if the credit union goes bust.
Still, it is always worth checking a credit union is properly authorised before joining or paying in money.
How do we find one?
The easiest place to start is the Find Your Credit Union website. We can search by home postcode, work postcode, employer, or other links.
Not every credit union offers the same services. Some do loans, savings and budgeting accounts. Others may be more limited.
So it is worth checking:
- Can we join?
- What savings accounts do they offer?
- Do they offer the type of loan we need?
- What will repayments cost each month?
- Are there any fees?
- What happens if we miss a payment?
A credit union may not be the answer every time. But with more people set to get access, now is a good time to know what they do.
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