A credit union is a unique organisation. It is regulated and authorised by the Financial Services Authority to accept money deposits from members (these are people who pay £1 joining fee and £1 share)
When a pool of money has built up, the credit union can lend its members money from the pool of savings. An ordinary loan is repaid back by the member at 1% per month on a decreasing balance eg to borrow £100 over one year will cost £6 in interest.
The credit union encourages savers to continue to save, and whilst loans are higher than shares a member cannot withdraw savings – unlike banks this helps with the ethos of responsible lending and borrowing practices.
The organisation is owned and run by its members and the Board of Directors is unpaid. We do make profits however and after these have been used to pay expenses (staff salaries for instance) any remaining profit is paid back to the members every year in the form of a dividend. This is added to share balances.
The credit union specialises in making loans to people who do not normally have access to mainstream bank accounts or affordable credit structures. They are often prey to loan sharks and doorstep lending companies which charge very high rates of interest. Our ethos is to teach our members to manage their money better and improve their lives.
During the past few years the government has seen the value to the local community of credit unions, and it has begun a series of changes to the law to allow credit unions to grow and compete with other financial institutions.
In Calderdale our organisation was the result of a merger between five local credit unions. In it’s present form we have been registered since 2003 and consist of 3 offices situated at Ovenden, Todmorden and the head office at Northgate.