International Credit Union Day!Posted on Oct 15, 2020
Today is International Credit Union Day and we’re proud to join credit unions across the world to celebrate the spirit of the global credit union movement. This is the 72nd anniversary of International Credit Union Day, which has been celebrated on the third Thursday in October since 1948.
Credit unions help improve lives by providing access to affordable, reliable and sustainable financial services. With the COVID-19 pandemic this year, improving lives has taken on a new meaning. Credit unions around the world have found other ways to protect their members-not just financially, but physically as well. From working remotely to maintain services, adapting branches, providing sanitising stations, emergency loans and financial assistance, to boosting digital services to allow members to access their accounts, credit unions around the world have stepped up to inspire hope in these extraordinary times. Find out more about how Penny Post has continued to help its members here.
As a member of Penny Post, you are part of an amazing global credit union movement, people helping people, communities helping communities, inspiring hope in a global community.
International Credit Union Day is also a great opportunity to reflect on how credit unions work and how they differ from other financial institutions ….
What is a credit union?
A credit union is a financial co-operative which provides savings, loans and a range of services to its members.
Credit unions are owned by the people who use their services, and not by external shareholders or investors. When someone joins a credit union, they become a member and a shareholder. Every member has an equal say on matters that affect the credit union – via voting at the Annual General Meetings – and our Board of Directors are elected from within the membership.
Members are its only shareholders, so when the credit union is successful, it share this success with its members in the form of an annual dividend.
Credit unions vary in size, but every credit union has a Common Bond, meaning members have something in common. This can be working for a particular employer or in a particular industry, or simply living or working in a specified geographical area.
How a credit union works
Credit unions ask members to ‘save regularly’. Members’ savings create a ‘pool of money’, which is in turn offered to other members as affordable loans.
Interest earned on loans is the credit union’s only income, and covers its administration costs. Any surplus is put into reserves for future investment, or paid back to members’ as an annual dividend. Regulators stipulate strict financial ratios to help ensure stability.
Should a member wish to borrow, loan repayments are tailored to suit a member’s budget, and the member continues to save whilst repaying their loan. For example, if a member was comfortable saving £20 a week and wanted to take out a loan, repayments could be say £18 a week, with £2 a week savings, therefore not affecting the members overall household budget.
Worldwide CU Movement
Credit unions have always been part of a large international movement and have a proven track record across the world.
In the USA, 55% of adults are credit union members, 42% in Canada, 26% in Australia & an impressive 75% in Ireland, whilst in the UK its 3-4%.
The ideas and values central to how credit unions work were developed in the 19th century. The movement grew quickly throughout America and Canada and soon began to have an influence across the rest of the world, notably in Jamaica during the 1940’s, and in Ireland during the late 1950’s.
UK Credit Unions
Credit unions took longer to take off in England, Scotland and Wales, and there was no legal structure for credit unions in the UK until 1979. People who had seen the idea work in Ireland, the Caribbean, and North America were amongst the first British credit union pioneers.
The UK credit union sector is growing, with an impressive £3.64 billion in assets. In the last decade, membership has almost doubled to 1.9 million, and assets have almost tripled.
UK credit unions are regulated by the Financial Conduct Authority & the Prudential Regulation Authority and most importantly, savings are protected by the Financial Services Compensation Scheme (FSCS) currently to the value of £85,000, just like banks and building societies.
Happy International Credit Union Day from everyone at Penny Post!