Credit Unions are a mutual, a bit like a building society, that let people within their community save and borrow money.
Essentially they do the same job as a bank, but with fewer complicated ‘other activities’ that we know banks undertake.
Credit Unions are licenced deposit takers authorised and regulated by the Financial Services Authority. It is always worth checking the status of a Credit Union before using them, but they will be members of the Financial Services Compensation Scheme which guarantees deposits up to £85,000 per person, per institution.
Typically, you used to have to be a part of a community in order to join a Credit Union, so for example a geographical community (e.g. London Mutual Credit Union) or a workplace community (e.g. The NHS Credit Union). However these restrictions have been eased somewhat to make it easier to join a credit union.
Rather than become become a customer of a credit union, you actually apply to become a member, and are assigned a membership number. Once accepted, you may choose to save with or borrow from the union, which can offer attractive interest rates.
To find your local credit union you may wish to visit: http://www.findyourcreditunion.co.uk/home