Credit union current accounts

If you’ve had difficulty opening an account with a bank or building society, a credit union current account could be a good option for you. Credit unions are also popular with people who prefer to manage their money through a not-for-profit organisation.

What are credit unions?

Credit unions are co-operatives that are set up by and for members to benefit their community. They mainly offer savings accounts and loans to their members, but some now offer current accounts too.

What you can do with a credit union current account

What a credit union current account offers you will depend on which credit union you use.

Here’s what you can do with most credit unions’ current accounts:

  • Have wages, salary, benefits, pensions and tax credits paid straight into your account
  • Pay cheques in for free, as long as the amount is in British pounds sterling
  • Get money out over the counter or from some cashpoint machines, including LINK
  • Pay money in over the counter at the credit union
  • Check your account balance over the counter or from some cashpoint machines, including LINK
  • Get budgeting advice and support

And with some credit union current accounts, you can also:

  • Pay your bills by Direct Debit or standing order
  • Have separate ‘jars’ in your account to help you budget for rent, different types of household bills and other spending
  • Pay for things using a pre-paid card or a debit card

Whichever credit union you use, there’s no minimum monthly amount that you have to pay into your current account. And you won’t need to pass a credit check to get an account because credit unions don’t provide overdrafts.

If you need to borrow money, you can apply to the credit union for a loan. It would look at your income, savings and past history before making a decision. (See ‘Other accounts and services’ below.)

Who can join a credit union?

To become a member of a credit union, you need to have a common bond with the other members – for example, living in the same area, working for the same employer, or belonging to the same church or trade union.

How much does a credit union current account cost?

Credit unions sometimes charge an administration fee of £5–£10 a month on current accounts, especially if they offer help with budgeting. However, some social housing landlords and councils have been working with credit unions to offer tenants current accounts with lower fees. If your landlord is one of them, you may find that it will pay the administration fee for you.

Because there’s no overdraft with a credit union account, there are no charges or interest to pay.

However, if the account allows you to set up Direct Debits and standing orders to pay bills, you need to check whether you will be charged for refused Direct Debits.

Other credit union accounts and services

Savings accounts

It’s worth checking the savings rates offered by your local credit union – you might find that they beat those offered by high street banks and building societies. Once you’re a member and have been saving with the credit union for a certain period of time, you can apply for a loan.

Learn more about Credit union savings accounts.

Loans

Credit unions try to ensure they only let their members take out loans that they are able to pay back. They do this by assessing your income and looking at how much you’ve been able to save. There’s a cap on the amount of interest they can charge on their loans of 3% a month in Great Britain (from April 2014) and 1% a month in Northern Ireland (which may go up).

Read our guide on Borrowing from a credit union.

How to get a credit union account

All credit unions will ask for proof of your identity and address before you can open an account. If you don’t have the documents they need, ask them what alternatives they will accept.

What to do if things go wrong with your credit union account

Credit unions are regulated by the Financial Conduct Authority, so have to meet certain standards. If you’re unhappy with the service you’ve received from a credit union, you should raise the issue with them first. If the credit union doesn’t resolve your complaint, you can then take it to the Financial Ombudsman Service.

To find out how to make a complaint, read our guide Sort out a money problem or make a complaint.