Comments on: Sharp practice http://www.antoniabance.org.uk/2006/06/16/sharp-practice/ Thoughts of Antonia, Labour activist and feminist in Oxford Mon, 13 Oct 2008 06:51:54 +0000 http://wordpress.org/?v=2.5.1 By: Sam http://www.antoniabance.org.uk/2006/06/16/sharp-practice/#comment-8145 Sam Fri, 16 Jun 2006 22:26:55 +0000 http://www.antoniabance.org.uk/2006/06/16/sharp-practice/#comment-8145 Hmm - their website claims that there are "many advantages" in saving with a credit union, then lists a subset of the things that I am able to do with a bank. They are, essentially, asking people to invest in the business of lending money cheaply to people with poor credit, without giving any clue as to the sort or return one might expect. There may, of course, be a legal impediment to providing guesses about future earnings, but it doesn't make a great sales pitch. One of the advantages of a credit union seems to be that people are less likely to default on a loan from their neighbours than on a loan from some faceless bank that makes billions of pounds a year profit, so it's possible for the credit union to charge a lower interest rate. The ABCUL claims that credit unions are typically able to offer 2-3% interest on savings. You can walk in to a high-street building society and open a cash ISA with 1 pound, and receive a guaranteed 4.5% interest. It seems as though you should view the difference as either a fee that you pay to get access to the loan services (which are indeed cheap if you have a poor credit history) or as an act of charity towards your poorer neighbours who would benefit from cheap loans. That isn't to say that this is necessarily a bad thing, and if you invested the maximum 5000 quid with the credit union, you'd only lose a hundred quid or so a year, but it should be born in mind. Hmm - their website claims that there are “many advantages” in saving with a credit union, then lists a subset of the things that I am able to do with a bank. They are, essentially, asking people to invest in the business of lending money cheaply to people with poor credit, without giving any clue as to the sort or return one might expect. There may, of course, be a legal impediment to providing guesses about future earnings, but it doesn’t make a great sales pitch.

One of the advantages of a credit union seems to be that people are less likely to default on a loan from their neighbours than on a loan from some faceless bank that makes billions of pounds a year profit, so it’s possible for the credit union to charge a lower interest rate.

The ABCUL claims that credit unions are typically able to offer 2-3% interest on savings. You can walk in to a high-street building society and open a cash ISA with 1 pound, and receive a guaranteed 4.5% interest. It seems as though you should view the difference as either a fee that you pay to get access to the loan services (which are indeed cheap if you have a poor credit history) or as an act of charity towards your poorer neighbours who would benefit from cheap loans. That isn’t to say that this is necessarily a bad thing, and if you invested the maximum 5000 quid with the credit union, you’d only lose a hundred quid or so a year, but it should be born in mind.

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