Most Credit Unions in the UK come under the umbrella organisation of ABCUL(Association of British Credit Unions)they have a very informative web site. Here
Credit Unions are a Not for Profit Organisation which basically means that all the profits are put back into the fund or deployed amongst the members as dividends annually .Credit Unions are controlled by the FSA and have very strict guidelines on the amounts of cash reserves they carry in case of mass withdrawals.
The interest rate on loans is 12.68% apr or one percent per month.
The usual procedure for obtaining a loan is to open an account and save for a certain period usually decided by the management committee before a loan is granted, the amount loaned is usually set at a multiple of the amount in savings again decided by the management committee. The management committee is elected by the members once a year at the AGM and any member can be nominated. It costs £1 to join.
A lot of Credit Unions are now issuing loans in special circumstances without collateral. The clever thing about the repayments is that you agree when you take out the loan to pay a certain amount into your savings when you make a loan repayment.
To illustrate this, if you save an initial £50 the CU may lend you £100.The interest due in this would be £6.50 total over one year. So if you paid back £2.50 per week after a year you would have paid off your loan and have a balance of £73.50 in your savings.
On a second loan most CU's offer a loan of three times your savings so you could borrow £220 and still have £74.5 in savings which helps the organisation to fund loans to other members and enables the lender to build capital as he repays the debt.
Life insurance is a part of the deal and generally pays out double the value of savings to the next of kin or authorised party as well as paying off his loan, this is a free service.
The Credit Union is run by volunteers and it is not possible to be on the committee if you are a paid worker. Paid workers are usually only taken on by the larger Credit Unions where the amounts of Money involved require the specialised services not available in the voluntary sector, and yes these are usually funded by Grants from various sources.
I must admit to being a great fan of the Credit Union movement and I can say that very few things have given me as much pleasure as the time I was able to pay off a loan shark who was charging a whopping 430% apr on a loan for a member and set them on the road to controlling their finances.
The biggest Credit Unions in this country belong to the Police and Fire services who use their loans to buy their houses etc. And in Ireland the Credit Unions are huge and have many high street premises and many hundreds of thousands of members Issuing mortgages and provide all the services you would expect from your high street bank but without lining the pockets of the directors.