MSE News: UK-wide credit union launches with table-topping savings rates

innovate

Still not as good (after BR tax) as the best 3-year ISA, and also, why would I go for a 3-year fix at 2.75% when I can get 3, 4 and 5% instant access?

SnowMan

Looking at the savings page of their website again, and selecting the 3 year box, I see the minimum amount for the 3 year account is £5,000, and the maximum amount is £15,000 which is quite restrictive.

It just says the interest rate is 2.75%. There is no indication this is an AER or even if it is an annual rate. You suspect that it has to be an annual rate, and is the AER but that would concern me slightly all the same. A simple clarification in their information is needed and would solve that one. It says that interest is paid at the end of the 3 years, presumably compounded over the 3 years, again showing the AER would solve that one.

amandajc

I'm not sure that the purpose of the Community Bank (or Credit Unions in general) is just to compete with High Street banks on savings rates. It is also about giving people an ethical, non-profit making alternative to PayDay Loan sites by using the funds of all to help those that need loans rather than exploiting people short on cash in emergencies. From that point of view any positive developments in this area are good news.

Archi_Bald

SnowMan wrote: »

It just says the interest rate is 2.75%.

I asked them and they said:

our rates are gross and we do not deduct any tax. So our rate of interest and AER are the same. The interest paid:

1- On a deposit of £5,000 after one year would be £107.5

2- On a deposit of £5,000 after two years would be ££225

3- On a deposit of £5,000 after three years would be £412.5

Based on the amounts they quote, there is no compounding, so I am not sure why they say their quoted rates are AER. Strange they would pay interest without BR tax deducted, too, but may be this is how CUs work.

It definitely looks to me that their rates are easily beatable. For instance, for a deposit of £5,000 an Aldermore 3 year cash ISA will pay £345.15 interest, whilst the CommunityBank interest after BR tax is only £330. Though of course, you could put £15K into CommunityBank but only £5,760 into Aldermore.

You could also put £15K, and a lot more, into current accounts paying 3%, on instant access, beating any of the CommunityBank rates hands down. Only real hurdles you might have are credit checks but these should be no issue for somebody with £££K to save. And you take the risk that the banks will drop their interest rates with 2 months notice - - I for one am very happy to take that risk.

I also cannot find any T&Cs anywhere - could anyone else? All I can find is their Privacy Policy and their Common Bond Requirements.

There is, however, a £5 bounty for a referring friend, lol. Why not give that 'spare' cash to a needy borrower? Makes me wonder what other generosities they afford.

Quite a poor show, that website, and the accounts on offer, IMO.

A very firm thumbs down from me.

jimjames

innovate wrote: »

But they don't. They don't even come close.

Interesting that the headline for this story on MSE is identical to the one in the Daily Mail.

I wonder if the hype is just a cut & paste of a press release from the credit union without actually checking if it is a leading rate.

datostar

'I'm not sure about the concept of them operating outside of their geographical area of Brent as it slightly undermines the concept of local community based credit unions.'

CU's don't have to operate within a particular geographical area, but need a 'Common Bond'. The Common Bond of this one is extremely wide - '[FONT=AllerRegular, Verdana, Arial, Helvetica, sans-serif]Our common bond is broad and includes all who live or work in the London Borough of Brent and is open nationwide to all who support the culture, cuisine, finance or welfare of the South Asian community in the UK. My Community Bank members evidence this Common Bond by being proud supporters of the British Asian Trust through a donation we make on their behalf each year.'

[/FONT]I'd have a couple of reservations here. Credit Unions don't usually call themselves 'Banks' and are quite keen to dissociate themselves from banks. There is no mention of it being a member of ABCUL (or any other trade association) which currently represents around 70% of British Credit Unions and provides a lot of help in administrative and financial matters.

Dr_Cuckoo3

datostar wrote: »

[FONT=AllerRegular, Verdana, Arial, Helvetica, sans-serif]
[/FONT]I'd have a couple of reservations here. Credit Unions don't usually call themselves 'Banks' and are quite keen to dissociate themselves from banks. There is no mention of it being a member of ABCUL (or any other trade association) which currently represents around 70% of British Credit Unions and provides a lot of help in administrative and financial matters.

Cornwall Credit union markets itself using the name "bank"

http://www.cornishcommunitybanking.co.uk/CCB/index.htm



My Community Bank is a trading name of Brent Shrine Credit Union who are ABCUL members
http://www.fsa.gov.uk/register/firmNamesCurr.do?sid=86357