A credit union is a member owned, financial co-operative which provides financial services only to its members (who are also the owners of the business).

Basically a credit union takes deposits (savings) from its members and then lends that money (loans) out to other members. The interest charged on those loans then provides for a return on the savings. This return is usually in the form of a retrospective dividend – as owners of the business, the depositors share in the risk and rewards of ownership and therefore the amount of the dividend depends on the performance of the credit union.

Credit unions are 'not for profit' businesses in the sense that they use the income generated to build capital, provide services and provide a return to depositors.

Benefits of credit unions

Credit unions offer savings and loans which are underpinned by its ethical and community based roots. Typically, you will have access to your funds at any time and some credit unions offer a pre-paid visa debit card as an alternative method of withdrawing your money the same day. These may come with budgeting or 'envelope' facility to pay bills or rent and offer cash-back rewards.

A credit union makes loans to its members and is capped by law on the amount of interest it can charge. Members can borrow as little as £500 at various rates up to a maximum of 42.8% APR depending on the type of loan and credit union. There are no arrangement fees and no early repayment fees involved with the loans. All loans are based on affordability and applicants will be subject to a credit search.

Credit unions operating in the Warwick district area

City Save Credit Union
16 Waterloo Street
B2 5UG
Website: www.citysave.org.uk
Telephone 0121 616 6200

New Central Credit Union
41 Smithford Way
Website: www.newcentralcu.co.uk
Telephone: 024 7663 3456