Welcome to the National Credit Union

Hello, and a warm welcome to the National Credit Union.

We are an independent financial cooperative, setup to supply saving facilities and low interest loans to our valued members. Since the supply of credit has dried up on the high street, including bank loans and overdrafts, reputable organisations such as ours are becoming increasingly popular with those seeking short term credit union loans.

If you wish to become a member, or for more information about our service, please feel free to get in touch.

 

 

Should credit unions operate through the Post Office?

Would more people use credit unions if they could access services through their local Post Office? It would appear so.

Credit Where Credit’s Due recently conducted research that showed that 46% of consumers would have more faith in credit unions if they were available through the Post Office.

These findings back up those recently prepared for the DWP. The Department for Work and Pensions feasibility study into the expansion of credit unions found that there is a demand from consumers with low incomes for modern banking services and there is a potential market of around seven million individuals.

Andy Burrows from Consumer Focus said that the coalition believes around one million low income consumer could benefit from affordable credit and better access to banking facilities. Credit unions are one piece of the jigsaw and Post Office access would allow them to realise their potential. The very nature of credit unions means they could not afford to set up a branch network so it would be logical to tie up with post offices.

Marrying post offices and credit unions is a win win situation. Credit unions would get the benefit of greater access and awareness, they would be more convenient for consumers who would also receive an alternative to banking on the high street, and the post office network would also get a boost.

Mark Lyonette, the chief executive of ABCUL, said credit unions have already proved to be very popular in the areas where they have been set up. This latest research shows many more people would use credit unions if there was a tie up with the Post Office network. If this were to happen, low income customers could save hundreds of millions in interest payments and encourage many more to start saving regularly.

On the face of it this sounds like an excellent idea. A lot more people would be able to join credit unions and maybe this would tempt them away from the dreaded payday loan companies when they needed to borrow some money.

However, I do foresee one problem. The government keeps closing down Post Offices, especially in the more rural areas. What would happen to consumers who joined a credit union, only to find their only access to it shuts down a few months later? Or would a tie-up encourage the government to keep Post Offices open? Then it really would a win win situation for everybody!

 

Credit unions are growing at a rate of knots

Credit unions are definitely appearing on the radar more these days as people look for alternate ways to save and borrow.

Data recently released from the FSA shows that the credit union sector in Britain is going from strength to strength. Last year it recorded a 15% increase in assets, a 14% increase in lending and a 12% increase in deposits.

Credit unions still make up just a small part of the entire financial services market, but they are bucking the trend by growing by more than 300% over the last ten years.

Mark Lyonette, the chief executive of ABCUL said he was glad to see that the credit union sector continued to grow last year. The sector recognises the need for a modern, flexible and professional service and it as a result has seen excellent year-on-year results.

The legislative reforms that were secured at the beginning of the year are now starting to have an impact and the sector has developed a shared business model, which has been firmly established. This has laid down the foundations for credit unions to continue growing in the foreseeable future.

It also seems as if the public are starting to appreciate the value of credit unions. In a recent survey of more than 4,500 individuals on lower incomes, over 60% said they would take advantage of a credit union if there was one locally.

The DWP Credit Union Expansion Project hopes to help credit unions bring affordable services to as many as a million additional people within the next five years. This has to be good news and will hopefully entice people away from the dreaded payday lenders and help them access more affordable finance.

Credit unions charge very low interest rates of just 2%. Somebody who takes out a £300 loan over 52 weeks would expect to pay around £246 interest if the loan was with a home credit provided. If they went to a credit union, the interest would work out as a mere £40. Even if the interest rate increased to 3%, the interest paid on the loan would still only work out as £60.

There have been numerous complaints about payday loan companies recently. It’s unfortunate that struggling families feel they have no option to turn to these legal loan sharks, especially at a time when the UK’s economic future is in no way certain. Credit unions lend responsibly, loan sharks do not.

You don’t need a claims management company to reclaim PPI

The Association of British Credit Unions Ltd is delighted that MoneySavingExpert.com and Which? have got together and launched a campaign to inform the public that it is easy to claim compensation for mis-sold PPI without the need to use a claims management company.

Claims management companies are continually bombarding us with emails and trying to persuade us that we won’t get compensation unless we pay to use their services. This of course is absolute codswallop but they pray on the fact that people don’t understand the system.

Which? and MoneySavingExpert.com recently conducted a survey of more than 2,000 consumers and discovered that 25% of them did not realise that claims management companies charge a fee and just under 50% realised that they had as much chance of being successful if they handled their own claim instead of handing it to a fee charging company.

Richard Lloyd, the executive director of Which? explained that the survey demonstrated that a lot of people turn to claims management companies because they don’t realise that they can reclaim their money themselves by following some simple steps. Worryingly, they approach these companies without realising that they’ll have to pay a fee and this could seriously eat into their payout.

Unscrupulous claims management companies see PPI as a cash bonanza. They persuade people that their only hope of success is to use their services. Martin Lewis from MoneySavingExpert.com said he’d received a text from one such company informing him he was owed £3,000 from a PPI policy, even though he’s never had one!

Mark Lyonette, the chief executive of ABCUL, said credit unions are also being targeted by claims management companies. Some credit unions have received claims from these companies even though they don’t sell PPI. It transpires that CMCs are encouraging people to claim compensation for loans protection insurance even though this is provided free to people who borrow from a credit union.

He went on to say that any member of a credit union who is concerned they may have been mis-sold a payment protection product should contact the union concerned themselves rather than confuse the situation by going through a claims management company.

Don’t let yourself be conned by companies saying they can help you reclaim money. Whilst you may think they’re there to help you, they’re really lining their own pockets at your expense.
 

Playing the waiting game is not for the faint-hearted

So you’ve decided to take the plunge and move house. Now the hard work begins! This is not an operation to be entered into lightly. In fact moving home is one of the most stressful times in anybody’s life, so a well-prepared plan of attack is essential.

There are two main elements to consider and they’re both of equal importance. You need to sell your current property AND you need to find another one. In the ideal world somebody would come knocking on your door and say I want to buy your house, here’s £X and you could trot off to your dream house, armed with funds and say something similar. Everybody would be happy. But I did say in the ideal world, and you have to admit, we aren’t living in it.

How are you going to sell your house? Will you do it yourself or trust the task to your local estate agent? You’re probably more likely to get success if you trust it to the professionals, but make sure you understand and agree the way they’ll market the property.

A friend of mine has just put his house on the market after visiting two local estate agents. They both provided him with similar valuations, both charge the same fees and they would both advertise his property on Rightmove as well as their own website. So which did he choose? One wanted to put his property up for sale at the top end of the valuation bracket to “test the market”. OK, that might be sensible if you’ve got time on your hands, BUT my friend has already put an offer in on another property and wants to sell quickly! He doesn’t want to wait around for months, so that firm lost his business.

The house is now up for sale at what he considers a reasonable price, but of course it is open to negotiation and he has a “must get” figure in mind to ensure he can get his mortgage on the new property. He’s already put in an offer on another property, and that has been accepted subject to him selling his current home reasonably quickly and he’s eager to proceed with the next stage, which is securing a new mortgage. Ah, but now he’s faced with a problem. He can’t secure a mortgage until he’s sold the current property because the bank doesn’t know how much he’ll be able to put down as a deposit.

This is where one of the stress elements comes into play. He’s now playing the waiting game. How long will the sellers wait? What happens if a cash buyer turns up on their doorstep? Venturing into the property market is not for the faint-hearted that’s for sure!

Make the most of this year’s tax allowances early!

The new tax year is upon us and the mega tax efficient amongst us will already be thinking how they can make the most of their tax allowances this year.

The obvious place to start is with an ISA. Between now and 5th April 2013, you can invest a total of £11,280 in ISAs, of which a maximum of £5,640 can be put in a cash ISA. You could on the other hand put the entire £11,280 in a Stocks and Shares ISA. It’s thought that we give £403 million a year to the taxman instead of investing it in ISAs! Why should he benefit?

Pensions have been in the news a lot recently, specifically the fact that we aren’t saving enough towards our retirements.  You get tax relief on pensions contributions so it’s a sensible idea to take advantage of that allowance if you have some spare cash left at the end of each month. If we all did this, £2.45 billion could be going into pension funds instead of the taxman!

Nobody likes thinking about death. But one of the certainties of life is that it will eventually come to an end. An independent financial adviser can help you sort out your tax affairs in advance and ensure any inheritance tax due on your estate is kept to a minimum. After all, inheritance tax is charged at 40% – more money for you know who…

According to unbiased.co.uk, Brits will pay £12.6 billion in unnecessary tax in 2012. That works out as an average £421 each. Now what could you do with that?

Although the government is keen to simplify taxation, it still seems pretty complicated to the majority of us. We’ve all got a good idea what personal tax allowances are; they tell us the threshold before you start paying income tax and the subsequent thresholds before you have to pay the higher rates. Each year the threshold before you start paying income tax increases. As from April 6th, the rate is £8,105.

The HMRC website has loads of information about the different rates of tax and the different allowances you may be able to claim onto of your personal allowance. If it all reads like double Dutch to you, don’t despair. Tax planning is a worthwhile exercise and there are people out there who are happy to help you. Don’t give the taxman more than you need to. After all, your money has to be better off in your pocket, than his!

Credit union or payday lender? Surely that’s a no brainer!

Credit unions are springing up around the UK, in part to provide a sensible alternative to the dreaded payday loan companies.

As I’m sure you know, payday lenders have been known to charge exorbitant interest rates to vulnerable people who are unable to access credit from mainstream lenders.

So how do credit unions compare? Firstly, they’re not for profit community organisations, set up by the people, for the people. The important thing is that all the members have something in common, be it living in the same town, belonging to the same trade union or working in the same sector. Believe it or not there’s already about 500 of these credit unions in the UK and although we rarely hear of them, they have nearly one million members.

Remember these organisations are not out to make a profit. They’re there to help people organise their money. That includes saving when you can and only borrowing as much as you can comfortably afford to pay back. That’s a major plus point straight away. A lot of unscrupulous lenders throw money at you, knowing full well you can’t afford to repay it on the due date, simply so they can charge ridiculous amounts of interest.

Credit unions encourage members to save when they can and then use people’s savings to help those in need. We’re talking small loans here; from between £50 to £3,000. But that’s exactly the sort of amounts people try to borrow from loan sharks or payday advance companies.

Interest rates can vary but as a rule they’ll not be above 26.8% APR. A £2,000 loan, taken over a period of 12 months, but cost you £191.80 a month at 26.8% APR, or just £178.40 if the interest was the typical 12.7% APR. There are normally no early repayment charges and each loan includes free life insurance cover.

The maximum term for an unsecured loan is usually five years, but if you want to get a secured loan it could run for up to ten years. If you’ve been a member of a credit union for some time, you may be able to get longer repayment terms.

Of course each credit union is different. Some may want you to save with them regularly for a while before they grant you a loan, others may be happy to help from the outset.

Credit unions will become increasingly more popular as people wake up to the dangers of the “cash in your bank in 15 minutes” brigade. Why not have a look around your neighbourhood and see if there’s already one in existence!

 

Are other credit card companies going to follow Virgin’s lead?

15,000 people who have a credit card with Virgin Money are none to pleased that their interest rates are going to increase by a whopping 50%. And who can blame them!

This interest rate rise is only being imposed on certain customers and according to Virgin the victims have been selected by MBNA, the company that runs the card. But they are likely to be customers who already have financial difficulties and have maybe missed a couple of payment deadlines in the past. Their rate on purchases will go up from 16.8% to 24.9% and the rate of balance transfers will leap up to a massive 27.9%.

To make it worse, affected customers have been given a “take it or leave it” ultimatum. They can refuse to accept the increase, but if they do that they can no longer spend any money on the card, although they will be able to repay what they owe at their current interest rate.

Now this could cause problems for people who have a less than perfect credit rating. We no longer have a situation where companies are handing out cards to anybody. Even Vanquis Bank, the firm that gives cards to people with an impaired rating, says that only 18% of applications are successful.

In March 2009, the average interest rate for somebody taking out a new credit card was 15.7%. By the end of last month, it had risen to 17.3%.

There are still some good credit card deals around for people who have a perfect credit rating. The Halifax, Marks and Spencer and Tesco Clubcard all offer 0% interest on purchases for 15 months. But Kevin Mountford from Moneysupermarket.com has warned that not all applicants will get such preferential terms. He explained that credit card companies are only obligated to give their advertised rate to 50% of people who apply.

We’ve already seen banks and building societies raising mortgage rates recently and it seems hardly fair to penalise people further by upping credit card rates.

PwC has warned that mainstream lenders are making it harder for consumers to get credit and a lot of them have to turn to payday loan companies when they need money. This is not an advisable practice and it seems strange that the banks, who are keen to get hold of our savings, are unwilling to help their customers and would rather see them fall into the hands of companies that are nothing more than legal loan sharks.