Brighton & Hove City Council Trading Standards Brighton & Hove Trading Standards Service

Consumer Advice - Advice Sheets

22/02/05 - Credit Unions

Date: 12 December 2008

Credit Unions are financial co-operatives owned and controlled by their members. They offer convenient savings and low-interest loans to those who have a "common bond" which determines whether they can be a member. This can be people living or working in the same area, people working for the same employer or belonging to the same association such as a church or trade union.

There have been many concerns about the low numbers of people saving money. Credit unions make it easy to save, you can put away as much or little as you like, weekly, monthly or as often as you wish and you can pay it in at convenient local shops, collection points or direct from your wages. Credit unions aim to pay a dividend on savings every year. Life savings insurance is also included at no extra cost.

By law, credit unions cannot charge more than 1% a month on the reducing balance of the loan (an APR of 12.7%). What this means for example that if you borrowed 1000 over 1 year, you would repay no more than 1067 in total, but many credit unions charge less. Credit union loans come with no hidden charges and no penalties for repaying the loan early. Life insurance is built in, at no cost to the borrower, so if you were to die before you had repaid the loan, insurance would repay the loan for you.

Setting up a credit union is a process that may take between one and three years from the first idea to registration and authorisation as a credit union.The council may offer support to local credit unions by providing advice and information to help them get started and manage their affairs in a legal and efficient way.

If you wish to contact the East Sussex Credit Union, you can contact them on (01273) 234858 at Community Base, 113 Queens Road, Brighton, BN1 3XG or visit their website at

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