Credit unions are co-operatives offering savings and loans. They have conditions of membership - such as living or working in a particular area.

Credit unions are not about making a profit. They exist to help the members. However, most will only offer loans after you have saved with them for some time. There is usually a limit on how much you can borrow, too.

For more information about Credit unions see the web site of the
Association of British Credit Unions.

Interest on your savings
You decide how much money you would like to save each week or month. If you have a loan through the credit union it could be eligible to be insured for free so in the unlikely event of your death the outstanding balance will be repaid in full. You must continue to save while paying for your loan although if your savings total more than the outstanding balance of your loan you can withdraw the surplus money if you wish, or continue saving. Each year the credit union pays out its profits back to its members. This is called a 'dividend'. The dividend is calculated at a percentage rate set by the credit union on a yearly basis. The dividend might be a lower rate of interest than those offered by banks, building societies or insurance companies.

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Credit unions sometimes offer cheaper loans than those generally available in the marketplace. There is a limit to how much you can borrow. You might be able to borrow up to three times what you have in the credit union savings.

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If you were to die while repaying a loan the loan is instantly paid off.