The standard means of obtaining credit has become so widespread that being at the mercy of increasing interest rates and inflated charges on loans and credit cards has become so commonplace that it is easy to believe there is no other option. However, there is this unknown alternative which is called the credit union movement.
A credit union is known to be a profit sharing and a financial co – operative run democratically by the member of the union itself. Statistics also shows that the popularity of the credit union movement in the UK is continuously increasing since the union itself offers a more financially attractive alternative to the standard products offered by the banks.
The organization has three main goals that need to be achieved since maximizing profit is not their main concern.
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The first important aim of a credit union is to encourage and help its members to save money.
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Another aim of a credit union is to give support and financial assistance to its members in any way possible at the lowest rates of interest.
To render help and support to its members in the management of their financial affairs is another goal of the credit union.
To enable you to take advantage of the kind of services that a credit union offers, all you have to do is become a member.
The secret to becoming a union member is to have a ‘common bond’. The common bond determines whether or not you will be accepted as a member of a credit union and this could be that you reside in a specified area, work for a particular employer or within a particular trade, or that you are a member of a certain club or association.
Because of this, credit unions welcome everybody from within the common bond regardless of income, employment status or age and also – and perhaps more crucially, regardless of your credit rating or if you are unable to save a regular amount. So whether you have a poor credit rating or not you can still become a member of a credit union and save as little or as much as you like.
The credit union can surely provide low cost financial services to its members with the use of the sum of all members’ savings. Although each credit union (as all mutual societies) must ensure that enough money is set aside to ensure financial stability, all other profits are used to provide the lowest interest rates for members’ loans whilst returning an attractive rate of interest for its savers.
All money borrowed from or saved with a credit union must be in the name of a member and as such, no money can be borrowed in the name of your business.