|Posted by Heavenlycuppa on March 15, 2012 at 1:10 PM|
When it comes to finances and borrowing money most people’s immediate thought turns to will a bank help me and if so which bank will offer the best deal. They have to consider how much interest will have to be paid, a calculation that can add significantly to the borrowed sum.
There are alternative means, for instance you could ask a friendly family member and there is the constant bombardment of TV ads telling you, if you need a loan fast, to call their number.
However, there is yet another solution. It is one that doesn’t get much publicity and that is a credit union.
Five Wells CU was founded 10 years ago and offered membership to anyone living or working within the borough of Wellingborough. Five Wells CU expanded its boundary to include the towns of Rushden and Higham Ferrers in celebration of its 10th Anniversary.
Credit unions may be run by volunteer members but are businesses nonetheless, strictly governed and regulated by the Financial Services Authority (FSA) and the Data Protection Act. We are covered by the Financial Services Compensation Scheme (FSCS). The FSCS can pay compensation to depositors if a credit union is unable to meet its financial obligations. So members are completely safe with us.
So what is a credit union and how does it work?
Run by and for its members, a credit union is a financial co-operative that offers low cost loans and savings and dividends. The principal is simple: members deposit savings which creates a fund for its own members to borrow from at very low cost. Unlike banks and other finance companies, it is all about helping its own members, it is not out to make a lot of money or pay ridiculous wages and bonuses. At Five Wells there are no paid employees, its running costs are relatively low and are funded by the interest earned on loans and also grant funding.
Joining is simple as it involves just a one-off payment of £2. Members can then save any amount they like, from £1 a week. Members are eligible to apply for a loan after 13 weeks of regular saving. No credit checks are made on savers and loans.
Loans run at a set repayment scale according to amount. They are agreed subject to the saving status of the individual. The interest rate is fixed (2% per month, 26.68% APR). It is only charged on the outstanding loan, not the total amount borrowed. Loans can be used for any purpose, from holidays, school uniforms or Christmas presents to emergency situations such as replacing a washing machine, but unlike banks, there are no final fees and no penalties for early settlement. Our speciality is small loans but we can go up to the limit set by the members of £2,000 (including interest).
Savings and loan repayments can be made by standing order and also in person at our collection points. In Wellingborough there are collection points at Wellingborough Homes in town on Monday morning, The Well Cafe, Hemmingwell and Glamis Hall on Tuesday morning. There is a collection point in Rushden at Heavenly Cuppa on Thursday mornings. We have regular users and a lot of them have got to know each other so it can be very much like a community meeting on collection days.
We are always looking for new members to help either at the collection points or even on the administration side of the business. At present Five Wells CU has 20 volunteers mainly manning the collection points on a rota basis. The business side is run by an elected board of directors from the members. Although it is a voluntary position, there are very stringent checks and board members have to be vetted by the FSA. Savers need to have been a member for 3 months before they can be appointed to the board.
Five Wells CU is having an Open Day
at Heavenly Cuppa, 106 High Street, Rushden on Saturday 21st April 11am to 2pm.
Why not come along for a chat and see how we can all help each other?
Categories: Community Groups