Credit Unions - Are these a good option for savers and should they be offered as an employee benefit

ForumUser7

powerspowers said:

Band7 said:

powerspowers said:

1. credit unions are not for profit and the money is invested in the membership based on a common bond based on employment or locality- so your savings could benefit a fellow bus driver to buy a new fridge or someone local to kit out their new home. 

How do your loan rates compare with those of other lenders?  

Credit union loans are capped at 42.6 APR and a lot of loans are at that level due to the risk profile of the customer and low operating margins. 

Payday lenders are usually around 200% and doorstep lenders can be over 400%. Not everyone can get a 0% credit card. 

I thought it was 3% APR, but it turns out that is just the monthly rate! 😬

flaneurs_lobster

wmb194 said:

Third rate and amateurish would be my assessment of credit unions. They'll never see widespread adoption until the silly, 'common bond' restriction is lifted.

The "silly "common bond"" is the reason for their existence. If by "amateurish" you mean (often) staffed by volunteers, then yes, and often better for it. 

Third rate? If you are meaning their savings rates then yes, they are not competing with the High Street, you save with them so that you might be able to borrow later. Don't often spend their funds on flashy web interfaces or phone apps either.

I'm guessing that you are probably not a member of their target demographic. Unless you've ever needed a loan to buy a fridge to store baby milk and the alternative to a CU is the local shark charging 300%.

wmb194

flaneurs_lobster said:

wmb194 said:

Third rate and amateurish would be my assessment of credit unions. They'll never see widespread adoption until the silly, 'common bond' restriction is lifted.

The "silly "common bond"" is the reason for their existence. If by "amateurish" you mean (often) staffed by volunteers, then yes, and often better for it. 

Third rate? If you are meaning their savings rates then yes, they are not competing with the High Street, you save with them so that you might be able to borrow later. Don't often spend their funds on flashy web interfaces or phone apps either.

I'm guessing that you are probably not a member of their target demographic. Unless you've ever needed a loan to buy a fridge to store baby milk and the alternative to a CU is the local shark charging 300%.

Financial institutions can exist without the need for a common bond. These aren't ever going to expand to become more mainstream and concomitantly professional as long as it's a legal requirement. Why would I save at a lousy rate to be gouged later with an appalling loan rate? You'd be better using a better savings provider and when you're desperate borrow from Provident Financial...

Third rate because their offerings are largely useless e.g., poor internet banking, poor rates for savings and loans and poor availability: my local CU is some kind of part-time affair (and the last time I looked its website is utterly useless).

flaneurs_lobster

Financial institutions can exist without the need for a common bond.

Really? F Me, who knew!

You really have missed the point, CUs don't want to become "more mainstream". They serve a particular set of individuals (by definition) who for whatever reason do not engage with the "mainstream" financial institutions. 

If there wasn't a want and need for their services then they would simply cease (as many have). Until that happens I will continue to support my local CU. It is (whisper it) Socialism in action.

wmb194

flaneurs_lobster said:

Financial institutions can exist without the need for a common bond.

Really? F Me, who knew!

You really have missed the point, CUs don't want to become "more mainstream". They serve a particular set of individuals (by definition) who for whatever reason do not engage with the "mainstream" financial institutions. 

If there wasn't a want and need for their services then they would simply cease (as many have). Until that happens I will continue to support my local CU. It is (whisper it) Socialism in action.

The problem is that it means they remain and will continue to remain sub-scale which jeopardises their existence as these sorts of companies do better when they can spread risk and their running costs across lots of customers . This creates another reason why they're third rate: you've noticed that they're generally not very profitable and have an alarming tendency to go 'pop.' You cannot help anyone if you don't exist.

Bridlington1

flaneurs_lobster said:

wmb194 said:

Third rate and amateurish would be my assessment of credit unions. They'll never see widespread adoption until the silly, 'common bond' restriction is lifted.

The "silly "common bond"" is the reason for their existence. If by "amateurish" you mean (often) staffed by volunteers, then yes, and often better for it. 

Third rate? If you are meaning their savings rates then yes, they are not competing with the High Street, you save with them so that you might be able to borrow later. Don't often spend their funds on flashy web interfaces or phone apps either.

I'm guessing that you are probably not a member of their target demographic. Unless you've ever needed a loan to buy a fridge to store baby milk and the alternative to a CU is the local shark charging 300%.

Most of the time yes their rates are dismal, though occasionally they can come up with a very good deal. HEY credit union are doing a Christmas saver in which they will give you £25 for making 3 deposits into the account. No minimum deposit requirement so you can get £25 from them for depositing a grand total of 3p and leaving it there till November.

[Deleted User]

I am a member of a CU purely for the "death Benefits" they provide. It pays my wife I think £2000 towards funeral expenses and a 50% uplift on whatever balance I have when I die.

rich184

wmb194 said:

Third rate and amateurish would be my assessment of credit unions. They'll never see widespread adoption until the silly, 'common bond' restriction is lifted.

That may be your experience but mine is very different!  My credit union has a strong digital service, pays a competitive return on my savings and a range of fairly priced loan options.  They provide financial education too.  Also, their average time to answer the telephone is 15 seconds.  Third rate and amateurish?  I don’t think so. 

wmb194

rich184 said:

wmb194 said:

Third rate and amateurish would be my assessment of credit unions. They'll never see widespread adoption until the silly, 'common bond' restriction is lifted.

That may be your experience but mine is very different!  My credit union has a strong digital service, pays a competitive return on my savings and a range of fairly priced loan options.  They provide financial education too.  Also, their average time to answer the telephone is 15 seconds.  Third rate and amateurish?  I don’t think so. 

Name names.

flaneurs_lobster

wmb194 said:

rich184 said:

wmb194 said:

Third rate and amateurish would be my assessment of credit unions. They'll never see widespread adoption until the silly, 'common bond' restriction is lifted.

That may be your experience but mine is very different!  My credit union has a strong digital service, pays a competitive return on my savings and a range of fairly priced loan options.  They provide financial education too.  Also, their average time to answer the telephone is 15 seconds.  Third rate and amateurish?  I don’t think so. 

Name names.

Absolutely, big them up!