Credit Unions offer alternative to high street bank accounts

From this weekend people will have a new home for their money as credit unions launch current accounts.

Credit unions are financial co-operatives set up to give access to financial services to their members. Over the last 25 years the sector has seen massive growth and the introduction of current accounts is a major step forward in the development of credit unions in the UK.

Even today many people in the UK do not have current accounts. This is for a number of reasons, but the Government has identified that individuals without current accounts are generally at a disadvantage in society. Some people are unable to provide the utility bills or passports that banks require to open current accounts. Others may be concerned about opaque pricing strategies by the High Street banks. Whatever the reasons, the new credit union current account is designed to provide access to current account services to many more people.

According to retired firefighter Gordon Ramsay of East Kilbride, on the outskirts of Glasgow, and one of the first people to open such an account, it is excellent, offering advantages over many High Street bank current accounts.

“I have been a credit union members since 1991 when I started saving with them and I was really keen to open a current account.

“My credit union, Scotwest, is based less than half an hour away from me so I see it as a real alternative to the massive national and international High Street banks. With the VISA-linked debit card I can pay for goods anywhere I go and can check my balance at any cash machine.

“One of the excellent things is that, as there is no overdraft facility, I cannot get into debt or incur additional charges, which makes it much easier to keep track of spending. Added to that there is an upfront monthly admin charge, which is transparent, so you always know what you are going to have to pay – unlike some of the charges levied by banks for overdrafts, writing cheques and the like.

“In fact I am now seriously thinking of closing my existing bank account and using just this one from Scotwest Credit Union.”

The new credit union current account offers a debit card which can be used in shops and to withdraw money from cash machines. Although there will be no cheque books or overdrafts, account holders will be able to set up standing orders and direct debits, giving them much greater control over their finances.

The accounts will be run and promoted by individual credit unions, but the behind the scenes administration is being carried out by The Co-operative Bank.

According to Mark Lyonette, Chief Executive of the Association of British Credit Unions Limited (ABCUL), the organisation behind the development of the accounts, these new banking services go far beyond the basic bank accounts offered by High Street Banks.

“We can offer members a current account service similar to that offered by banks, but with all the added extras associated with a financial co-operative that is owned and run by its members, for the benefit of those members.

“Offering credit union members access to banking services in this way represents a major step forward in helping to meet the Government’s aim of eliminating financial exclusion.”