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Money: Join the Union and be a real credit to yourself.

ONCE they were only there to offer a lifeline in times of need - but now joining a credit union could be the smartest financial move you will make.

Because they don't aim for profits, they can offer loans at the lowest rates of interest.

And their popularity will get another boost later this year when new rules come into force allowing them to offer interest-bearing share accounts, longer repayment periods for loans, and to take on more members.

Among the fastest-growing trends is the workplace-based credit union.

"They're excellent because they encourage you to save when you haven't got a lot of money and don't think you can save," says Jackie Jackson, one of the 3,000 members of Plane Saver, set up by British Airways employees. "If you put a small amount away, you don't notice it.""Plane Saver is the largest credit union in the south of England and one of more than 600 credit unions with 200,000 members and around pounds 100million in assets in the UK.

They are particularly useful to the one-in-four people who are credit- blacklisted and the one and a half million households which have no access to a bank account. Credit union members save a regular sum each month and a pool of money is built up which finances the small loans to members. The interest charged is limited by law to no more than one per cent a month, or 12.68 per cent a year.

A typical loan would be pounds 1,000. Credit unions cannot give unsecured loans for more than two years and loans are capped at pounds 5,000 above what a member has saved. All members get free life insurance up to the value of their savings and free loan-protection cover.

Savers are paid a dividend once a year out of the earnings of the credit union. These are generally about three to five per cent.

The Licensed Taxi Drivers Association has a credit union that 2,500 London cabbies have joined. Spokesman Steve Hawes said: ""Currently drivers use loans of up to pounds 5,000 for the repair and maintenance of cabs.

"But the change in regulations means savers can borrow up to one and a half per cent of the union's assets."And you only pay one per cent interest on your outstanding balance."

Greater Manchester Police Force Credit Union has 5,000 members and assets of pounds 6million. General manager Bob Mallett said: "The bulk of loans are for home improvements, cars, holidays and computers.

"We've also been paying a seven per cent dividend on savings for the past five years, which is a very competitive rate."

Many credit unions are community based, like one in Camberwell, South London, which has been running for 27 years and has 3,000 members.

Spokeswoman Margaret Erumi said: "A credit union accepts people for what they are and gives them a sense of being a part of something.

"Even if people save just pounds 2 a week, that can help them take their children for a holiday."

Another community-based union is Trafford United in Manchester, which has 800 members. But treasurer Leon Perkins warned: "It took us seven years to get into the position where we had enough assets for people to borrow pounds 3,000 rather than just pounds 300."

For more details call: The Association of British Credit Unions, 0161 832 3694; National Federation of Credit Unions, 0191 268 9652; or the Scottish League of Credit Unions, 0141 774 7036.
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Title Annotation:Features
Author:Jones, Chris
Publication:Sunday Mirror (London, England)
Date:Mar 28, 1999
Words:587
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