More than two million Brits are members of a credit union. In this guide, you will find a list of the best credit unions you can bank with in the UK.
What Are Credit Unions?
A credit union is a non-profit financial organisation consisting of members with a common community. Since January 8, 2012, however, people can join a credit union even if they do not live in the same area or work in the same company as most of the other members.
A credit union is a licensed deposit-taker under the regulatory oversight of the Financial Conduct Authority. The Financial Services Compensation Scheme (FSCS) fully covers credit union savings of up to £85,000 per member.
To join a credit union, go to a website called Find Your Credit Union and run a search. You can search based on where you live, your employer, your professional association, and where you work.
Once you find a union, contact them to find out if you are eligible to join. Both individuals and organisations (maximum ten percent of the members) can join a credit union.
How Do Credit Unions Work?
Credit union members own, control the organisation, and elect volunteers to lead them.
Credit unions typically provide savings and loan services. However, they are branching out into mortgages, current accounts, and prepaid cards. Any profit a credit union makes goes towards developing the credit union and giving a return to savers.
Formerly, a credit union could only pay dividends on savings. Now, members can earn interest on savings as well. Note that savings interests are subject to tax.
Besides saving, you can also borrow from a credit union. Loans from this type of organisation are cheaper compared to other providers. For instance, a credit union should not charge interest of over three percent “a month on the reducing balance of a loan.” That said, most unions charge one percent a month on the reducing balance of a loan (12.7 percent annual percentage rate).
Previously, you had to have saved with the credit union to borrow a loan. However, some credit unions are moving away from this requirement.
You can get a small personal loan or a larger loan, like a mortgage. For example, some unions can lend members unsecured loans of up to ten years or secured ones of up to 25 years. Additionally, you can repay your loan through a Direct Debit, a payroll deduction, or with cash.
Some loans also have life insurance built into them. Consequently, your insurance will repay an unpaid debt for you if you pass on.
Best Credit Unions in the UK
Below, you will find our top five picks of the best UK credit unions.
London Capital Credit Union
London Capital Credit Union began operations in 1997 as Islington Council Employees Credit Union. You can join the union if you live, work, study, or worship in these areas: Brent, Hackney, Kent, Islington, Haringey, Barnet, Camden, London, Enfield, and Waltham Forest.
Also, you can join this union if you are a member of The Cooperative Group in London and the South East Region, and Unite the Union, among other organisations. Membership application forms are available on the website. By 2014, the union had more than 11,000 members and over £7 million in assets.
London Capital mainly deals with savings, where members earn dividends calculated on average savings. Additionally, it offers low-cost loans. The recommended savings amounts are at least £20pcm or £5pw.
When it comes to loans, the union offers several categories, as shown below:
| Loan type | Amount (£) | APR interest rate (charged on the reducing balance of the loan) |
| Saver loan 1 | 1,201-20,000 | 12.7 percent |
| Saver loan 2 | 1,201-20,000 | 19.7 percent |
| Homeowner | 7,500-20,000 | 2.9 to 9.9 percent |
| Flexi | 1-1200 | 26.8 percent |
| Security | Within the balance of your savings | 4.9 percent |
| Family | 100-800 | 19.7 percent |
If you have applied for a loan and received approval as a non-member, the union will ask you to open an account with a minimum deposit of £50.
Borrowers are encouraged to keep saving during the loan repayment term. Moreover, you need to maintain a high credit score to get loan approval in the future. You can apply for a loan online or through the mobile app.
London Credit offers savings accounts for children and an alternative to credit and debit cards. Also, it provides an online budget planning tool.
National Fire Savers Credit Union
National Fire Savers Credit Union consists of firefighters and fire rescue staff. The founding members established the union in 1998 to give firefighters access to savings and affordable loans. You can join this union if you work in this profession and live in England, Wales, and Scotland. The membership application form is available on their website.
National Fire Savers has more than £11 million in assets. Additionally, it had 4,000 members as of 2016.
The union offers three savings accounts where members can earn dividends. These accounts include Membership, Savings Plus, and Christmas Club. Keep in mind that the maximum amount of shares that a member can hold in total on all three accounts is £40,000.
Dividend rates depend on the type of savings account. For example, the union paid a dividend rate of one percent to Membership Account holders in 2019. Savings Plus members, on the other hand, received a dividend rate of 1.25 percent.
The Membership savings account has a one-off fee of £5, and there is no maximum or minimum limit to how much you can contribute. On the contrary, the minimum opening balances for the Savings Plus and Christmas Club accounts are £1,000 and £1, respectively.
Furthermore, you can borrow from the union through the following loan types:
| Loan | Eligibility | Amount (£) | Loan Term (months) | APR (%) |
| Everyday | Active membership | 50-1,500 | 1-12 | 26.8 |
| Member | Min 3 consecutive monthly savings payments | 500-7,500 | 1-48 | 17.2 (£500-£5,000) 14.9 (More than £5,000) |
| Affiliate | Min 3 consecutive monthly savings payments and must be on payroll deduction | 3,000-20,000 | 1-60 | 12.6 (£3,000-£5,000) 9.4 (£5,001-£10,000) 5.6 (More than £10,000) |
| Non-affiliate | Min 6 consecutive monthly savings payments | 3,000-10,000 | 1-48 | 13.2 |
| Savers | Fully covered by unattached shares in Membership Account | 2,000-20,000 | 1-60 | 3 |
Members can make loan applications online and submit them within the deadline. The union processes loans twice a week.
Furthermore, National Fire Savers offers banking services through a Change Account. Members that apply for this account can make the same transactions that banks provide. Also, they will get a prepaid debit Mastercard.
Lewisham Plus Credit Union
Lewisham Plus Credit Union (LPCU) serves more than 9,000 adults and about 1,500 junior savers. The founding members started the union in 1992. Previously, the union was known as ACTS CU Ltd until it merged with Deptford and New Cross Credit Union in 2010.
You can join this union if you live or work in Lewisham, Bromley, or in the SE19 postal code. Moreover, staff and residents of Lewisham Homes and Phoenix Community Housing Association can join. Membership application forms are available online.
Lewisham Plus Credit offer savings, loan, and banking services. Its savings accounts include Credit Union Share Account, Young Savers Account, For Societies, Clubs, and Charities, and Standing Order Mandate for Saving. Interestingly, members can save the amounts they wish weekly or monthly as long as they have a minimum of £1 in their accounts. The maximum saving contributions are £30,000 for adults and £5,000 for children.
The union also pays dividends. For example, in 2018, it paid a share account dividend of 0.5 percent and a Young Savers Account dividend of 1.25 percent.
LPCU provides these five loan types:
| Loan Type | Eligibility/Purpose | Amount (£) |
| Save as you borrow | Low-income members with a poor credit record | Max 2,000 |
| Personal | Members with sufficient income and a decent credit record | Max 10,000 |
| Loyalty saver | For the loyal saver that wants to borrow less than their savings | Max 10,000 |
| Household goods | For purchasing household goods like furniture | Max 500 or 50 percent of your last loan |
| Guarantor | Accessible under certain circumstances | Call or visit the LPCU branch to get this loan |
The LPCU loan interest rates vary from 6.2 percent APR to 42.6 percent APR. Furthermore, the loan terms last from a period of twelve months to five years.
Under their banking services, LPCU offers its members a current account with benefits like debit cards and Direct Debits.
North London Credit Union
North London Credit Union is another reputable credit union that serves a wide population. The founding members established the union in 1994.
You can join the union if you work, live, study, volunteer, or worship in
the London Boroughs of Haringey, Waltham Forest, Barnet, and Enfield. Additionally, the credit union serves the postal code areas of EN6, 7,8,9,10, and 11.
The other eligibility requirement for becoming a member is that you should be an employee of organisations like Barnet & Southgate College, Enfield Enterprise, and London Energy, among others. Moreover, business owners that are members of the London Enterprise Club, Your Business Community, or North London Chamber of Commerce & Enterprise can apply for membership. The membership application form is available online.
NLCU offers three savings accounts: Regular, Junior, and Christmas. The regular account is available to all members, where they can save as little as £10. The maximum savings amount for the junior account is £2,500, while the minimum savings amount for the Christmas account is £5.
Active members that save in the regular account get an annual dividend. The dividend payout depends on the union’s financial performance that year.
Furthermore, NLCU provides four loan products. However, one product was unavailable on the website at the time of writing this guide. On the other hand, the union has temporarily suspended the debt consolidation loan due to the COVID-19 pandemic. That said, below are the terms of the three loan products displayed on the website.
|
Loan Type |
Amount (£) |
Loan Term |
APR (%) |
|
Secured |
Borrow up to the value of your savings |
6-60 months |
5 |
|
Personal |
Between 300 and 10,000 |
6-60 months |
Depends on the amount you borrow |
|
Debt consolidation |
Depends on the amount you owe creditors |
6-60 months |
26.82% |
Members can apply online to request for a loan. Moreover, you can repay your loan through direct debit or payroll deduction.
You can also get banking services from NLCU. Members can apply to get an Engage Classic Visa debit card or a Smartcash Visa debit card for children of eight to 16 years.
Eastern Savings & Loans Credit Union
Eastern Savings & Loans Credit Union was created after the Ipswich & Suffolk, Norfolk, and Cambridge City credit unions merged in 2014.
ESLCU serves members that live, volunteer, work, or study inside the boundaries of Cambridgeshire, Norfolk, and Suffolk. Moreover, you are eligible to join this union if you are an employee of several organisations like Greene King PLC, South Norfolk Council, and Freebridge Housing Association. You can also join ESLCU if you are a tenant of Crosskeys Homes, Daisy Lettings Limited, and a member of British Racing School, among others. Note that eligible people can fill the membership application form online.
The union offers several savings accounts. These are the Dividend, Junior Saver, and Christmas saver accounts. What’s more, every member gets a dividend account.
When you join the union, £3 of the £5 joining fee goes towards a member’s initial shareholding. Additionally, ESLCU requires members to have a minimum balance of £5 to retain membership. The union also charges 25p per week to operate members’ accounts. Members receive an annual dividend based on the Board of Directors’ recommendation.
The Christmas saver allows members to start saving as early as January. However, members can only access the savings after 1 November. Otherwise, they have to pay £5 in penalties.
Moreover, parents can open a junior saver account to save for children under the age of 18 years. The interest per year is one percent. However, there are no joining fees or membership charges.
Besides saving accounts, ESLCU provides the loan products below.
|
Loan Type |
Amount (£) |
|
Child benefit |
500 |
|
Starter |
Between 500-1,500 |
|
Flexible |
Between 1,500-4,000 |
|
Christmas |
Depends on the amount you wish to borrow |
|
Car |
Maximum 4,000 |
Other than savings and loan products, the union gives a bank account and a prepaid debit Mastercard. ESL Credit Union also provides members with financial resources through its blog.
To start banking with a credit union, visit their websites or walk into any of their local branches.
