What is a credit union and how does it work?

Date: 06 April 2020

Ever wondered what credit unions are, and how they work?

Read on to discover why credit unions are the modern way to take control of your financial future.


What is a credit union?

A credit union is a not-for-profit organisation owned and operated by members where resource is shared exclusively for the benefit of a community which in this case is GMB Trade Union.

Credit unions provide alternative savings and loans services to those offered by banks and other financial institutions, the difference is that credit unions are entirely focused on their members’ financial wellbeing, rather than financial profit.

There are no greedy shareholders or faceless investors and all funds are kept within the member community, rather than being invested or speculated elsewhere.


What does a credit union do?

Credit unions offer very competitive rates on lending and savings and trading surpluses are shared with members in the form of an annual dividend.

Although they’ve been around for more than 50 years, credit unions offer a modern alternative to traditional banking.

While many of us struggle to trust banks and high street lenders, credit unions have an honest inclusive approach to finances, giving members an alternative, simple and ethical way to save and borrow money.


What are the benefits of joining a credit union?

Financial benefits

Credit unions usually outperform high street interest rates, and all money is retained and shared between members to grow their community.

GMB Credit Unions sole purpose is to improve the financial wellbeing of its members by saving them money on borrowing and helping members make best use of their savings.

Ethical benefits

Credit Unions are democratic each member has a vote and a say in how the credit union operates.

GMB Credit Union doesn’t have greedy shareholders or faceless investors we are a transparent organisation which shares its trading surpluses with members and circulates money for the sole benefit of the GMB community.

Community benefits

Credit unions are owned and run by their members and are committed to social investment in their community’s. They offer a fast, fair and flexible service which treats members as individuals.


Is my money safe in a credit union?

Yes, it’s a completely secure way to manage your finances.

As member savings are used as lending for other members, money circulates within the community, rather than being speculated on the market or invested unethically to make profits for shareholders.

GMB Credit Union is regulated by the Financial Conduct Authority and the Prudential Regulation Authority, with member savings of up to £85,000 protected by the Financial Services Compensation Scheme.


How can I take out a loan with a credit union?

Applying for a loan with GMB Credit Union is simple. Discover how here.

GMB members can apply whether they have any savings or not – they’re simply asked to save a minimum of £10 pm during the loan period.

With an easy online application process and quick decisions, GMB Credit Union doesn’t apply any loan fees or early repayment charges. Paperwork is kept to a minimum and members can request top-up loans later if needed.

GMB Credit Union members can borrow between £100 and £15,000 for any reasonable purpose and at market leading rates.

Offering a cost-effective alternative to other lenders, credit unions are a trusted supplier who promotes responsible lending and is interested in establishing long term mutually productive relationships.


How can I save with a credit union?

Saving with GMB Credit Union is easy and rewarding.

Credit unions like GMB Credit Union offer extremely competitive rates by pooling members’ savings to provide loans for other members. Members can save up to £20,000 by regular saving or lump sum deposits and members receive a competitive annual dividend rate.

As well as a standard easy access savings account, GMB members can open junior accounts for children, or save for the festive season through a Christmas Club.

All member savings are protected by the Financial Services Compensation Scheme up to £85,000. Plus, members can access their balance or request statements quickly and easily online.


Start saving or borrowing today

Interested in reaping the rewards of a credit union? GMB Union is open to all GMB trade union members and their immediate family members

Are you a GMB member? Start saving or borrowing with your GMB Credit Union today here.