Credit Unions FAQs

Command those who are rich… not to be arrogant nor put their hope in wealth, which is so uncertain, but to put their hope in God who richly provides us with everything for our enjoyment. Command them to do good, to be rich in good deeds and to be generous and willing to share.        1 Timothy 6: 17-18 

What are Credit Unions?

  • Mutual membership organisations, linked by something in common- usually a place of work or where you live and work (paid and unpaid).

What do they do?

  • Offer savings facilities for their members
  • Work for the benefit of members, not shareholders
  • Offer mainly small and affordable loans to members who are over 18
  • They may offer members interest (a dividend) on savings

Are they secure?

  • They are regulated in the same way as any other financial organisation where you might deposit money

So what has that got to do with being willing to share when wealth is uncertain?

Credit Unions are mutual, cooperative organisations. To join them you have to live or work in that local district – in our case in Pembrokeshire, Ceredigion or Carmarthenshire.

The  Churches Mutual Credit Union (CMCU) formed in collaboration by the Church of England, the Church of Scotland, the Methodist Church of Great Britain, the Church in Wales and the Scottish Episcopal Church is open to all Anglican clergy, licensed lay ministers, PCC members and church or church-related employees.  Parishes can also join and later in 2015 so can church members.  You can also be a member of more than one credit union.

The Diocesan Council for Social Responsibility in St Davids Diocese, in considering how to tackle financial exclusion, identified Credit Unions as being part of the solution. People who can’t access affordable credit or basic banking services can be excluded in many different ways and it is our Christian duty to resist joining in blaming them as individuals but to struggle with them towards a mutual solution. For most people hearing the full story changes our attitudes.

 ‘Poverty is depression, hopelessness…shame, humiliation… [it] erodes the human spirit… This sense of shame is mirrored by an attitude that blames individuals most likely to be in poverty for causing poverty. It is a reasonable assumption that the degree to which there is a culture of blame relates to the degree to which people associate feelings of shame with poverty.’[1]

Many people are finding saving money difficult (26% adults run out of money before the end of the month)[2]. Unexpected financial difficulty can arise from unregulated loans but also events such as bereavement, divorce or redundancy. Credit Unions can help people when they are in need. Individuals and organisations who become members and save money allow Credit Unions to make loans to members. Through making loans Credit Unions generate income (capped at 3% a month).

Maybe you feel some sense of injustice over the recent history of investment banking or the practices of banks which are free to customers in credit but charge the poorest who get overdrawn or miss a repayment deadline. Credit Unions offer an alternative with upfront membership cost.

If the argument for social justice hasn’t won you, what about what’s in it for you? Becoming a member is a simple way to give and therefore improve your wellbeing, (five ways to wellbeing)[3]. And research into inequality tells us that almost all social problems which impact even the richest people in a negative way have a relationship with inequality: by decreasing inequality, they decline.

‘The steeper the social gradient a problem has within a society, the more strongly it will be related to inequality’.[4]

Our vision in St Davids Diocese is to be Christ’s presence in every community and asks that we be outward facing, serving the communities of our three counties. As we engage in our communities we can blame or we can be practical. I suggest supporting the local Credit Union is one practical way in which we can all become participants and benefit too.

‘We must help credit unions to become bigger, better known and easier to access if we want them to compete with high interest lenders.’  Archbishop of Canterbury – Justin Welby

[1] What citizens say about poverty in Greater Manchester- an update Nov 2014.

[2] http://www.toyourcredit.org.uk/why-the-church

[3] http://www.toyourcredit.org.uk/stories/john

[4] The Spirit Level. Why equality is better for everyone. Wilson, R and Pickett, K 2010

Our thanks to Derby Diocese for their draft and the permission to adapt it for our diocesan use.