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What The F@%K is a Credit Union?

What The F@%K is a Credit Union?

What The F@%K is a Credit Union?

A bank without the profit? That’s pretty much a credit union.

It’s likely you’ve never heard of a credit union – hence the WTF – but let me tell you that they can be a very useful for students or people in the workforce on a tight budget. Here’s what we’ll cover in this post:


  1. What is le credit union
  2. The benefits of using one
  3. How students can take advantage of credit unions

credit union

What is a credit union?

It’s basically a group of people who get together and create a community savings and loans provider for the people in that group. Like a bank run by the people, or in other words ‘run by the members, for the members’. Which means, they’re non-profit.

The key about this community bank is that everyone who takes part must have all something in common. This could be that they all live in the same city, they’re all part of the same organisation (NHS) or same workforce (teachers, police, etc). Once you’re a member, you become involved in all the decisions taken and attend meetings, talk to third-party members, etc.

Similar to banks, they offer savings, loans, current accounts and mortgages. Pretty snazzy right? Oh and because they’re non-profit, the rates are very favourable and not too expensive.

Of course, you can only join a credit union if you’re eligible. You can check this at Find Your Credit Union.

But before you go over and open an account with a credit union, let’s list the benefits and drawbacks and whether you should consider joining one.


The cool stuff


  1. Access to small loans

Credit unions are willing to make small loans from £50 to £3,000 which a normal bank won’t do.


  1. Much safer than payday loans

In this payday loan post I explain why you should avoid payday loans like the plague. With a credit union you can still get your small loan without paying exorbitant interest and without paying hidden fees. The credit union is not interested in profit and since it’s such a tight-knit community, anyone stealing money will get caught pretty easily.


  1. Non-profit

Low fees. Since it’s a community and they have to make sure not to go bust, they are very careful with over-lending and are way more prudent. No housing bubbles bursting there.


  1. Protected by the FSC

Yes, if the credit union indeed goes bust, the FSC pays back £85,000 per person, per institution. So you’re covered.


  1. Built in life-insurance

In all credit unions there’s a built in life-insurance. So if you die, your loan is fully repaid. Good to know.


  1. Good customer service

Because it’s such a tight knit community and people are working together to help each other, the customer service is usually great.


credit union

here’s a sweet loan for university


The not-so-cool stuff


  1. Less technology

Since credit unions are not-for-profit, there aren’t many incentives to be technologically developed. This means very few of them have online apps and have easy to access online financial services. It also means it’s harder to find an ATM in the city, and the banks will be further away.


  1. Dividend rate instead of interest rate

Yes, you do get an interest rate on your savings account like a normal bank, however it’s called a dividend instead of interest. This is because the interest rate varies depending on how well the credit union does that year – so the profit they do generate year to year is paid back to the members as dividends. 


  1. Less resources

As mentioned in point 1, since they’re non-for-profit, they have less resources to improve the services of the credit union. This could be technology but it could also mean getting out of sticky situations or simply being able to offer a wider range of financial services.


  1. Pay for having a bank account

Yep, credit unions charge you maximum £1.5 a week for having an account with them. If you think about it, it makes sense; the credit union needs to make money to pay its dividends. But it’s still good to know.

credit union

back to the old ways

I’m a student: should I consider joining one?

I would say it really depends on one thing: whether you might take out a loan in the future.

Not only will the credit union grant you a secure and low fee loan, but they will also help you out and guide you on how to pay it back. Thousand times better than a payday loan or even a bank loan!

So if you think you might ever need to take out a loan in the future, a credit union is your safest bet. And remember, you can always have a credit union checkings account as well as a normal current account (just remember you’ll have to pay for the credit union one).

If not, it’s best to stick to a normal bank account – the technology certainly does make it easier.

The cool thing about taking out a loan from a credit union is that you could use it to pay for university. You get a much better interest rate, lower fees and some advice on the way. This girl took out several credit union loans to pay for her graduate school.

Some credit unions might be linked to your university, but because they do so little promotion and advertising, it can be hard to find them. The best way to find them is by going through the Find Your Credit Union website.

Honestly I hadn’t heard of credit unions till very recently (which is what prompted this awesome WTF post), which shows how little well-known it is. I do think they can be a great resource for students. Check ’em out or tell tell someone about them – it may help them get a degree.



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