A better way to save and borrow

Join your local credit union

If you’re on a low income and struggling to make ends meet, it can be tempting to use a payday loan company which promises to give you the cash quickly, without any credit checks. But falling foul of these money lenders can make your life a misery. Often, the interest they charge ends up spiralling out of control.

There is a better and safer way to borrow. If you need extra cash and have a poor credit history, your local credit union may be able to help you. A credit union is a financial co-operative which provides savings, loans and a range of services to its members. It is owned and controlled by the members. They’ve been set up to help people who don’t qualify for loans from mainstream lenders but need credit to pay for the essentials.

Responsible lending

Credit unions are a trustworthy alternative to payday loan companies and doorstep lenders. They operate on a not-for-profit basis and act in the interests of its members, which means they don’t let you take out loans you can’t pay back. There’s a cap on the amount of interest they can charge on their loans of 3% a month or 42.6% a year APR. They also offer free life insurance – so if you die before repaying the loan, the balance will be paid off.

As a responsible lender, most credit unions will want you to start saving with them first. Opening a savings account also lets you build up cash for planned expenses such as Christmas, birthdays and the start of the new school year. Most credit unions offer competitive interest rates on savings accounts, often higher than the mainstream banks.

They’re a good place to start saving, and you can begin with just a few pounds. Once you’ve opened your account, you’ll be able to manage it online.

How to join

If you’re interested in joining a credit union, then contact bpha’s Money Advice Service first on 0330 100 0272. As a bpha resident, we will pay your membership fee for the first year. We’ll also be able to recommend a credit union in your area.

For example, we have close links with Bedford Credit Union which now offers a ‘common bond’, so that any bpha resident, no matter where they live, can join.