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A Credit Union Tale

Janice bumped into her friend Karen whilst waiting at the Supermarket check-out; it was some months since they last met so they decided to have a coffee in the cafeteria and catch up on what they had been doing.

“It’s back to school for my girls”, Janice said. “They must be really growing up” said Karen, “they must be 14 and 11 now.”

“That’s right, and they are nearly as tall as me. They’ve really shot up, it has to be a new school uniform each and I’m at a loss to know where the money will come from.”“Yes that’s right the Banks and Building Societies do not want to know about small loans, and local money lenders charge such a high rate of interest that you have large debt and nobody likes to be ripped-off”

“Look Janice, I used to be in the same position, no savings and really stuck when events required money quickly, I was lucky to find a solution”.  “Not that Bank raid last year, Karen”. “No Janice, but it’s something that not only made me in control of my finances but introduced me to new friends, supportive friends, opened up a social life and gave me other benefits.”

“This seems good, but what is it”. “Well Janice, last year I joined a Friendly Society, the Oddfellows, and they were friendly, but to get to the point they also have a Credit Union, and this is something which you would benefit from joining, let me explain how it works”

“Firstly you have to be a member of the Oddfellows, its only £25 a year, but as I said there are socials, cash benefits for dental work and for glasses, and all manner of support when you need it.  You can then join the Credit Union.  You have to save regularly with a minimum of £5 per month, then after 6 months you can apply for a loan. The first loan is 5 times your savings, but after that it can be 10 times up to a maximum of £7500. When you have a loan the minimum £5 per week savings has to continue, but the beauty of this is that when you have repaid the loan your savings are greater, which is good but it also means that you can borrow more when you want to.”

“I can afford £5 per month, perhaps up to £15 if I try, but what do loans cost? “That’s easy Janice; the interest is 1% per month on what you owe, so as you pay the loan off, the interest to pay reduces.

If you had saved £10 per month for 6 months, your savings would have been £60, so a maximum loan of £300 would have been available. If you needed £180 for those school uniforms and wanted to pay the loan off over 12 months you would need to pay £15 per month plus on the first month interest of £1.80. As you pay of the £180 the interest is less each month. £1.65 for the second, £1.50 for the third, and so on; the last payment would be £0.15p, and there is no penalty for early payment, so if you won at the Bingo you could pay it off. There isn’t an administration charge either.  If you reduced your savings to the minimum £5, you would have £120 saved at the end of the year, and the other £5 that you have been saving before the loan would have gone towards your loan repayments and softened the blow.”

“This seems to be an answer to my occasional problems, cash flow as the financial people on the Telly calls it”. “Well Janice there are other aspects to the Credit Union such as free life savings and loan protection insurance; why don’t you get some more information, they are ever so helpful”.

“I use it for Christmas and holidays. Remember Alice who lost all the money she paid into Farepak. “Yes, the poor dear, she saved all year and when Christmas came the company went bust and she never even got a box of mince pies, let alone the big hamper that she paid for”. “That’s right, I paid for my Christmas fare through the Credit Union, so I could get exactly what I wanted from where I wanted, with no chance of losing my money.” “That’s a great idea Karen, I can never understand why they put those jars of olive stuffed with anchovies in those hampers”. “Me neither Janice!”      

For information about the Manchester Unity Credit Union call

0161 233 2569 or visit the web site www.manchesterunitycu.co.uk