Credit unions - how do they work?

hanes

Have been thinking of applying to join a credit union in my local town.

I did some research awhile ago but didnt look too indepth into them.

Can someone give a rundown of how they work and what criteria you need to entail to join?

I have read if you pay in xx amount each month eventually you will be able to apply for a 1% loan... is this correct?

How do they apply to people with less than polished credit histories?

I would love to be able to one day get a loan at that rate but surely if its possible everyone would be doing it and making the banks look silly?

EDIT: Never mind i found a few useful posts regarding

Stuart_W

Different credit unions have different conditions.

Most require some demonstration of saving prior to any loan.

The maximum interest they are permitted to legally charge on loans in 2% per month - that's 26.8% APR. Many offer loans well below this.

You will need to find out from your specific credit union what their situation is.

SnowTiger

hanes wrote: »

Have been thinking of applying to join a credit union in my local town.

I did some research awhile ago but didnt look too indepth into them.

Can someone give a rundown of how they work and what criteria you need to entail to join?

I have read if you pay in xx amount each month eventually you will be able to apply for a 1% loan... is this correct?

I looked in to joining a credit union a few years ago as a saver rather than a borrower. Unfortunately the interest rate they offer savers tends to be pants and are not guaranteed.

Most credit unions tend to have pretty amateur websites and some offer very misleading information. Take this one for example:

Up to £200 available, repaid at only 2% interest, either Weekly/Fortnightly or Monthly.

What does that mean? An APR of 2%, 2% interest per week or what? Legally they can't charge any more than 2% per month, so I guess that's what they mean. An APR of 26.8%. Which, perhaps, isn't as low as many people would expect, especially as savers can only expect a return on their investment of 1% or 2% if they're lucky.

iolanthe07

Unfortunately the interest rate they offer savers tends to be pants and are not guaranteed.

I think the hope is that you'll accept a poor interest rate out of altruism. That's why many of them are attached to churches/clubs/non-profit organisations/working men's clubs, and so. The philosophy is that members with savings will help out other members who have hit hard times, even if the return isn't that great.