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Saving with a credit union

About saving with a credit union

A credit union is a local financial co-operative, owned by its members, which offers some of the financial services you get at a bank or building society. For example, you can save money or get a loan at a low interest rate.

This page tells you about saving with a credit union, including:

For more information about borrowing money from a credit union, see Credit union loans.

Who can be part of a credit union

To be part of a credit union you have to share something in common with other members, called a common bond. This can be something like:

  • living or working in the same area
  • working for the same employer
  • belonging to the same church, trade union or other association.

Each credit union has its own common bond, but this will usually be based on the examples above. If a credit union's rules allow, it may have more than one common bond. This means a common bond based on a local community organisation, such as a tenants' association or a social club attached to a workplace, may be combined with common bond based on living or working in an area. So if you live outside an area that a credit union serves, you could still join it, if you're a tenant in a housing association that's linked to the credit union or you're an employee of a national company whose local workplace is linked to the credit union.

If one member of your family is already a member of a credit union, other relatives living at the same address can usually join too.

Why save with a credit union

A credit union savings account may be a good option for you if you can only afford to put a small amount of money away each week or you can only save now and then. Unlike some bank and building society savings accounts, you can put as little money as you like into a credit union savings account and you don’t have to save regularly. You just need £1 to open your account.

Many credit unions set up convenient local pay-in points, such as local shops or community centres, so you don’t have to make a special trip to a bank or building society.

As a reward for saving with a credit union, you get a dividend that is paid once a year. This is likely to be 2 or 3 per cent of the amount of money you have saved. Some credit unions may pay higher rates.

Some credit unions may issue interest-bearing shares on which they pay a specified rate of interest instead of paying a dividend. This means you can compare their rate of interest with what you would get from a savings account.

All the money you save in a credit union savings account up to the value of £85,000 is protected by the Financial Services Compensation Scheme. This is a fund which may be able to help if a company offering financial services goes bust or stops trading. For more information about the fund, go to:

Credit unions offer good value loans but you may have to be a reliable saver with the credit union before you can borrow from them.

For more information about borrowing money from a credit union, see Credit union loans.

Types of savings offered by credit unions

In addition to straightforward savings accounts, credit unions may offer a variety of savings products, including:

  • Individual Savings Accounts (ISAs), which allow you to save without paying any tax on the money you earn on your savings
  • Cash-based Child Trust Funds. These are savings accounts specially designed for the cash voucher you would have received from the government if you had a baby before 31 December 2010. The money must be used to save for your child’s future. If you already have an account you can continue to pay up to £1,200 a year until your child reaches 18.
  • Christmas savings accounts. If you want to spread the cost of Christmas over the year, you can save with a credit union Christmas savings account. You usually can’t take out the money until November and you will earn interest on it too.

For more information about ISAs, see Individual Savings Accounts (ISAs).

For more information about the Child Trust Fund, see Benefits for families and children.

How to find a credit union

You can get information about credit unions from the Association of British Credit Unions (ABCUL) website at or the ACE Credit Union Services website at You can search for a credit union near you at

In Scotland, you can get information about credit unions by checking the website of the Scottish League of Credit Unions members at

In Northern Ireland, you can get information about credit unions by checking the website of the Ulster Federation of Credit Unions at, or the Irish League of Credit Unions at

Further help and information

On Adviceguide

For more information on other types of savings that you can compare with credit union savings, see Ways to save.

For more information about money and finances on Adviceguide, see:

The Money Advice Service

The Money Advice Service is a free, independent service. Their website has lots of useful information on the different kinds of savings available, including information on saving with a credit union. Go to:

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