Friend joined Credit Union- what are the negatives?

bob_dob

Hi there,
A friend of mine has recently joined a credit union and I am unfamiliar with these although I have tried to check them out. Please can I ask what 'negatives' he will experience by choosing one as opposed to a bank?
Is it just the lack of direct debits and no cash card?

grumbler

MSE article: Credit Unions: Community savings & loans

JuicyJesus

bob_dob wrote: »

Hi there,
A friend of mine has recently joined a credit union and I am unfamiliar with these although I have tried to check them out. Please can I ask what 'negatives' he will experience by choosing one as opposed to a bank?
Is it just the lack of direct debits and no cash card?

Much higher chance of the union going under than with any major bank or building society. Sure, you'll get your money back if they're FSCS protected, but it's still a pain in the !!!!. Quite a few credit unions have gone bust.

cockmad

They pay a dividend (not interest) to their members who have savings with them. The dividend is normally quite small, 1%, at best 2%.

The dividend is not guaranteed. Should the Credit Union make a loss for the financial year, then no dividend is paid.

antrobus

JuicyJesus wrote: »

Much higher chance of the union going under than with any major bank or building society. Sure, you'll get your money back if they're FSCS protected, but it's still a pain in the !!!!. Quite a few credit unions have gone bust.

The count is six credit union failures so far in 2013. The last few years have been particularly brutal.

http://www.fscs.org.uk/industry/sub-schemes/accepting-deposits/deposit-defaults/