This article will change your life. You will be better off if you read it. Struggling through a tidal wave of Christmas debts? Smile! Can’t manage on your benefits/wages/student loan? Panic not! How can a magazine article sort your money? No-one’s going to pop a crock of gold into your garden, but if you agree […]

This article will change your life. You will be better off if you read it. Struggling through a tidal wave of Christmas debts? Smile! Can’t manage on your benefits/wages/student loan? Panic not! How can a magazine article sort your money? No-one’s going to pop a crock of gold into your garden, but if you agree that ‘crock of crap’ better describes most financial services, read on.

The answer, for an easy life, is credit unions. They’ve been quietly steaming on with what they do best for about 160 years, slowly growing, unlike boom-and-bust banks.

A credit union is a transparent organisation for members to save money, but that’s not half the story. By squirreling a bit aside, each member builds up a small part of the huge asset of lending power. Credit unions also lend to members, mostly at a flat rate of 1% per month (12% APR). But loans are a bad thing, right? Well yes, if you lived in a time of plenty, with a rich Daddy. Meanwhile, back in the real world, anything from a bus pass to a holiday, if you ‘put it on plastic’, sign a hire purchase agreement, ‘take advantage of easy credit terms’ or simply have a bank overdraft, it’s all the same thing. The only difference is the interest rate you pay. Oh, and the nastiness of the small print. Through thick and thin, credit unions charge the same. Interest rates don’t rise and fall, because they don’t speculate on the markets, unlike your greedy bank.

All they do, and do well, is offer savings and loan services at budget cost to ordinary people like us. It’s the original ethical investment. It’s all local and they keep money in the community, because there are no parasitic outside shareholders to pay.

Sheffield Credit Union is admittedly hard to find, tucked away in part of the market that I bet you’ve never seen. The opening hours are just 10am-1pm, but you’ll be surprised at the friendly welcome. No stress, no sales pitch, no call centres! They definitely don’t encourage members to take out loans they can’t afford. To join you’ll need to take some ID, so phone and check before setting off. There’s also a series of local outlets called collection points, so there may be one near you.

Did I mention I am a credit union member and have been for about 15 years? That’s how I can manage on a low income, sleep at night and still afford holidays by spreading out the cost. I don’t worry about the unexpected because I know they’re on my side. I’m nearly always paying off a loan, but all the while also slowly building up the other side of my balance sheet – my savings. You can be both ‘in the red’ in borrowings, whilst ‘in the black’ in savings. If you know how businesses work you’ll understand that it’s not a question of either/or. It takes some time to understand, so it’s worth talking over with the credit union staff. They’ll be happy to explain, and one thing’s for sure – it works.

The strength of credit unions is in the hundreds of individual members like me, not in some over-inflated stock market myth. No credit union has ever needed a bailout, but they are supervised by the Financial Services Authority, which regulates banks and provides a £50,000 Financial Services Compensation Scheme. Another thing – they provide a sort of life insurance for free. This is done through an insurance policy which pays out on the death of a member an amount on top of whatever savings they had at the time. It writes off any debt, so when you’re dead you’ve got no worries.

Management of credit unions is drawn from long-term members who get interested, take on the responsibility and stand for election annually at meetings which members can attend to hear all about the year’s progress.

I’ve met loads of people over the years who agreed with me that credit unions are a wonderful idea; educated, nice people who recommend credit union membership for everyone else, but didn’t join themselves. Why not? Couldn’t be bothered? Too awkward? Not at all – almost everything can be done by phone and bank transfers. I don’t believe there’s anyone who wouldn’t benefit from a credit union account. On the borrowing side, the loans are easy to arrange. I’ve called in right before going abroad, completely disorganised, and had my finances sorted in minutes. On the savings side, they usually pay a dividend every year. OK, it doesn’t compete with the rate you get if you’ve got a fortune to risk on the stock market, but who’s got that?

They can help people at all levels from those drowning among greedy loan-sharks offering rip-off rates, as well as people who have a regular salary or are self-employed.

You join a credit union for life, in the sense that it’s a friend for life. Over the years you’ll see your savings and the amount you can borrow grow. Remember where you heard it first. Change your life for the better – and your money back! Don’t believe it? 172 million credit union members around the world do…

Alt-Sheff
Sheffield Credit Union

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