Credit unions lend £1m to Armed Forces
16 Sep 16
Over £1 million in credit union loans have been made to Armed Forces personnel inside the first year of their partnership.
October 2015 saw the launch of Joining Forces, a new credit union service for the Armed Forces.
The arrangement, backed by the Ministry of Defence (MOD), is designed to tackle problems faced by Military personnel who may find themselves with limited access to financial services, leaving them potentially vulnerable to high cost credit providers.
The service – provided by three of the UK’s leading credit unions – provides simple savings accounts and affordable loan repayments for Service personnel straight from their pay.
It was launched under the Armed Forces Covenant, a promise by the nation that those who serve or who have served in the Armed Forces and their families are treated fairly.
Plane Saver Credit Union, Serve and Protect Credit Union and London Mutual Credit Union were chosen by the MOD to serve members of the Armed Forces, and in less than a year, have made over £1m in loans to Service personnel at lower rates than would be charged elsewhere.
Members of all three services – Army, Royal Navy and Royal Air Force – are welcome to join, along with veterans who are in receipt of an MOD pension.
As credit unions are owned and democratically governed by the people who use their services, they are well placed to understand the lifestyle and unique circumstances of Armed Forces personnel in a way other lenders may not be. And because loans are repaid direct from payroll, the risk is significantly reduced for the credit unions, allowing them to approve more loans and offer affordable rates of interest.
The credit union partnership has made a real difference to the lives of almost 1,000 Service personnel so far. Plane Saver helped one serviceman save more than £254 per month on interest payments he was making to credit cards and payday lenders. Similarly, Serve and Protect Credit Union gave a member of the Armed Forces a consolidation loan which saved him over £6,000 in interest payments on an expensive car loan he had accessed elsewhere.
And a Warrant Officer with 16 years’ service recently took a London Mutual Credit Union loan as he wanted to take a further education course in his spare time. He said: “The whole joining and loan application was simple and straightforward, and I was kept informed all through the loan application process.
“I am really glad that I’ve found an ethical and affordable lender – not for profit – and I’m particularly pleased that there are no hidden charges and no early repayment fees. I’m repaying the loan direct from salary and I can just forget about it, and I’m saving a small amount each month as well as repaying the loan.”