Credit Union For Mid Beds?
Credit Unions are local, not-for-profit, democratic, mutually owned organisations which offer savings schemes and low interest loans to their members. Some larger Credit Unions also provide services to help people manage their finances and debt repayments. A Credit Union is managed and controlled by a Board of Directors, which is elected by the membership at the Annual General Meeting. Each Credit Union has a Common Bond which determines who can become a member.
Although Mid Bedfordshire generally has very low levels of deprivation there
are instances of higher deprivation in some urban wards (e.g.Sandy, Biggleswade and Arlesey) as well as smaller pockets of hidden deprivation in some rural parts of the district.
In these areas physical access to financial services such as banks can be difficult for those that are financially excluded as well as for older people and those with disabilities. Doorstep money lending companies often operate to meet this gap. In Mid Beds, personal debt is also a growing problem and over 30% of cases at Mid Beds Citizens Advice Bureau now relate to debt.
Credit Unions offer a range of financial services for their members that
include:
· Savings Schemes – including current accounts, savings and Christmasd savings accounts and accounts for children.
· Low Interest Loans - the cost of a Credit Union loan is capped by law in the UK at no more than 2% a month, with no hidden charges and no penalties for repaying the loan early. Credit Unions are now moving towards applying different rates for different clients.
· Free Insurance – loan protection insurance is built into loan arrangements at no extra cost to the member. This insurance covers the amount of any
outstanding Credit Union loan if a member dies. Additionally a free life
insurance scheme provides a lump-sum if a member dies
· Budgeting Accounts/Bill Paying Service – these allow a member to pay in
a fixed amount each week/month which is used to pay agreed household billson the member's behalf.
· Benefits Direct Accounts –a national agreement with the Department for Work and Pensions, enables Credit Unions to accept benefit payments directly on behalf of their members.
· Consolidation of Other Loans - a Credit Union may also be able to provide a loan to a member to pay off debts for which they are paying very high interestrates.
· Work With Young People – as well as running children’s accounts, Credit
Unions develop the financial and saving skills and understanding with young people.
There is considerable evidence, both locally and nationally, that Credit Unions provide one of the best means of addressing financial exclusion. Currently there are no specific credit union services in Mid Bedfordshire, however the suggestion is that Mid Beds joins the newly expanded Bedford Credit Union, as there would not be enough demand in Mid Beds for a stand alone credit union to work. The Bedford Credit Union is well established (1998) with working practices and expertise already in place and has an excellent reputation.
The Overview Committee’s recommendations will then be considered by Mid Beds’ Executive at their January meeting.
