We aim to make our website as accessible as possible. However if you use a screen reader and require debt advice you may find it easier to phone us instead. Our phone number is 0 8 0 0 1 3 8 1 1 1 1. Freephone (including all mobiles).

Banking and borrowing

Credit unions. What are they and how do they work?

Credit unions are becoming a popular alternative to high street banks and expensive payday loans. But what are they and how do they work?

The main difference is that a credit union is a cooperative financial institution.

This means that the people who use the credit union decide how it is run. Rather than 'shareholders' deciding. Shareholders are people who have shares in a lender. Their shares earn them money when the business does well.

There are lots of reasons why people pick credit unions over banks but the main ones are:

  • A poor credit rating or difficulty opening a high street bank account
  • Supporting a local cooperative that does not profit shareholders
  • Having the flexibility to save what they can, when they want to
  • They provide an alternative to payday loans
  • Credit unions may be more willing to help:
    • People on a low income
    • People without a previous borrowing record

Credit unions have three main aims:

  • To provide loans at low interest rates
  • To encourage all members to save regularly
  • To help members in need of financial advice and help

You must be a member of a credit union to get a loan from them. Some will ask you to build savings first.

Find a credit union near you and get in touch to find out if they can help you.

Are you struggling with debt?

Money worries?

Find out how we can help you.

Get help now

How do credit unions work?

Credit unions are cooperatives. They work differently to a high street bank.

  • They are run by members for members
  • Lots of smaller credit unions rely on volunteers
    • Only the larger ones have paid staff
  • Most credit unions use members' money to run their services
  • Credit unions reward members not outside shareholders

How do I join a credit union?

You need to have a ‘common bond’ to open an account with a credit union.

Every member will be linked in some way, for example:

  • Living or working in the same area
  • Working for the same employer
  • Belonging to the same trade union
  • Belonging to the same church or other association

Most local areas have a credit union.

Anyone in the house of a person with a 'common bond' with a credit union can usually join.

Free debt help and advice

We can help if you are struggling with debt.

Use our online debt advice tool for free, expert advice.