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The Credit Union Difference

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If you caught some of the activity around International Credit Union Day at he end of last month, you may have wondered what the difference is between a credit union and a high street bank? Chris Kay explains the credit union difference.

In October, Cambrian was part of a global movement to raise awareness of credit unions.

As community co-operatives we don’t have the ad budgets of banks, building societies or payday lenders, but thanks to local newspapers and social media, we took the opportunity to encourage people to understand the difference that credit unions offer compared to mainstream banks and financial organisations.

At Cambrian, we are the first to admit that not everyone knows what a credit union is and how it differs from a bank or building society.

This is largely the reason that when we changed our name from North Wales Credit Union earlier this year, the signs above the doors of our offices became Cambrian Savings & Loans.

We wanted people to see immediately the products we offer and, to an extent, Cambrian Savings & Loans is exactly what it says on the signage.

However there is much more to a credit union than simply a place to save or borrow.

The main difference is that credit unions social enterprises that are owned by their members, with no external shareholders.

So not only do credit union members have a say on how things are run, but they also get a share in any surplus made after running costs are met. This is paid through annual dividends.

As a community-focussed social enterprise, our aim is to treat everyone as an individual, and so staff are trained to be financially sympathetic and consider everyone’s personal circumstances, not just be ruled by a computer-generated credit score.

Credit unions are there for everyone and it’s possible to borrow from as little as £50 for an emergency through to £15,000, and we guarantee no hidden fees or penalties for early repayments.

There is a calculator on the website to help you work out repayments before you apply and we encourage people to compare these rates with other lenders to find the best very deal for them.

Loans from Cambrian also come with free life insurance so if the unthinkable happened, the balance would be paid off.

While we offer loans, credit unions do encourage members to develop a habit of saving as even a small amount each month soon adds up.

Credit unions believe that a sensible approach to personal financial management helps to protect you from unexpected financial pressures and manage your money more effectively.

To make saving as easy as possible, Cambrian works with employers across north and mid Wales, including local authorities and Betsi Cadwaladr UHB, to set up payroll deduction schemes. This means members can nominate an amount be taken from your monthly salary and saved.

So those are a some of the differences, but there are also some important similarities with banks or building societies beyond simply offering savings and loans.

First, like banks and building societies, credit unions are regulated by the Financial Conduct Authority.

Second, and perhaps most importantly, to protect members’ savings, credit unions are part of the Government backed Financial Services Compensation Scheme. This means that individual savings of up to £75,000 are fully protected, just like a high street bank.

Chris Kay is CEO at Cambrian Credit Union, formerly North Wales Credit Union, which is a community based, financial services co-operative. Cambrian Credit Union Limited is a member of the Government-backed Financial Services Compensation Scheme, protecting individual deposits up to £75,000.

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