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Contact Larne
Credit Union
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CREDIT
UNION MEMBERSHIP
Anyone over 16 can be a
member of a credit union, once they hold the common bond.
Members of a credit union
are united by the common bond, which is the factor, which identifies the
credit union.
Becoming a member
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Joining
a credit union is easy. Once you are over 16 years of age and are within
the common bond, all you do is apply for membership, once accepted pay a
small entrance fee (usually £5), and start saving by purchasing a share in
the credit union (£5). After this you should continue saving regularly -
even small amounts, which will both give you the habit of thrift, and add
to the savings pool.
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The member as owner of
the credit union
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Every
person who saves in the credit union is an owner, and has a say in its
running. Each member has one vote in the running of the credit union. As a
democratic financial co-operative, the credit union is controlled by its
members.
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Rights and
responsibilities of members
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As a member you have a
right to a say in how your credit union is run. The best way to exercise
this right is to attend the annual general meeting, where you have one
vote, no matter how many or how few shares (savings) you have.
As one of the owners of
the credit union, you have a right to know how it is being run, and how it
is performing, and with this right comes the responsibility to contribute
to the effective and fair running of the credit union. Members are urged to
attend general meetings, contribute to discussions about credit union
matters, and, with care, elect to office people who will have the general
good of the membership at heart. Members are also encouraged to become
involved in the day-to-day running of the credit union as volunteers.
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What is the common bond
and why is it so important?
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The common bond is the
factor, which unites the members of the credit union - it is what members
have in common. Because of the common bond, all members have the good of
their community at heart, they know and trust each other. The common bond
ensures that the savings of members of the community are available to
fellow members as loans. It also enables members to know each other and to
make credit judgements on character and personal record rather than on
commercial `risk’ factors.
In Ireland the most
usual common bonds are:
- Community bond (where all
the members live, and in some cases work, in a particular locality).
- Occupational bond (where
all the members are in the same profession or occupation, or work for
the same employer).
- Associational bond (where
all the members are in the same society or association).
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Benefits of membership
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Members of credit
unions enjoy many benefits associated with their membership, including:
- Control over their own
finances.
- Encouragement and advice on
a regular savings programme.
- Loan availability at
relatively low rates of interest, which remain consistent even during
times of economic turbulence.
- Security of savings through
the credit union's fidelity bond, and through the Irish League of
Credit Unions' Savings Protection Scheme.
- Loan Protection and Life
Savings Insurance under most conditions at no direct cost to the
member.
- The confidence that the
credit union has no hidden charges.
- The knowledge that their
own savings are being used in their own community, for provident and
productive purposes.
Please check with your
local credit union for other services provided. Many credit unions offer
foreign exchange, world-wide money transfer, saving stamps, extended
insurance products, accounts for young children, students etc.
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CREDIT
UNION SAVINGS
Members come together in a credit union for
two main reasons:
- To set up a means whereby they can save with
security on a regular basis.
- From this fund of savings to provide loans to
each other.
Shares
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Each £1 saved is the
equivalent of a single share. Shares build up surprisingly quickly once the
member sets up a regular savings pattern. Each share then is eligible for a
dividend at the end of the year. The more savings held by the credit union,
the more funds available for loans to members.
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Common fund
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As the amount of shares
builds up, the common fund of money grows. This is then available for
providing loans to members. All members are encouraged to save regularly,
even when repaying a loan. This gives the member several direct benefits,
and ensures that there are funds in the credit union for use by all
members.
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Security
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Credit union members can rest easy in the
assurance that their savings are safe. Credit unions in Ireland, which are
affiliated to the Irish League of Credit Unions, are secured in several
ways:
- All officials of credit unions, whether
volunteers or staff, must be Fidelity Bonded.
- Savings, up to a limit of £10,000 per member
are protected by the Savings Protection Scheme in all credit unions
participating in the Scheme.
- Members savings within certain limits are
insured through Life Savings Insurance
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Added confidence for members is given by
the fact that:
- All monies received in credit unions are
properly recorded and lodged regularly.
- Full financial statements are prepared and can
be examined by members.
- Annual independently audited returns are lodged
with the relevant regulatory authority.
A Credit Union Savings Plan
Now let us show you how a regular credit
union savings plan can help you build up a substantial savings accounts.
For example if each week you save:
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Years
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£5
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£10
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5
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£1300
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£2600
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4
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£1040
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£2080
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3
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£780
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£1560
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2
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£520
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£1040
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1
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£260
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£520
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This table does not
include dividends as rates vary from one credit union to another. (However,
adding dividends could increase the total substantially.)
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Dividends
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Savings are used to make loans to
members. The interest received from loans and investments (if a surplus
cash flow allows for investment) is used:
- To pay expenses.
- To build up reserves (capital).
- The remaining income may be returned to
members as a dividend. The rate of dividend can vary from credit union
to credit union.
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Withdrawals
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Credit union shares are withdrawable,
provided they are not pledged as security for a loan. However, as far as
possible, members are encouraged to keep their savings intact, thus
ensuring that:
- They continue to earn a dividend.
- They continue to benefit from the Life
Savings Insurance protection.
- The member can maintain his credit worthiness
and capacity to borrow.
Members are encouraged to take out loans
rather than withdraw shares, as in many cases this will be the wiser
option, as long as the member can maintain the repayments. The credit union
will give personal advice to each member on the best course of action to
follow.
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Special savings schemes
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Some credit unions,
recognising that it is never too early to encourage children to get used to
the idea of saving regularly, have set up special savings schemes for
children, (for example in local schools). There are also savings stamps
schemes in operation in several credit unions - check with your own credit
union for details.
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CREDIT
UNION LOANS
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Most financial
institutions, which lend money, are in business primarily to make a profit
on the transaction. Your credit union is different. Because it is in
business solely to help its members, and is owned by its members, the
credit union regulates its affairs in the best interests of members and
therefore does not charge high interest rates.
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How to apply
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Your credit union will consider loan
applications from members for any worthwhile purpose. Each application is
treated in the utmost confidence and will be considered on its own merits.
It is credit union policy to meet the borrowing requirements of as many
members as possible, so, depending on the available funds, a number of
smaller loans may be given priority over a single large loan.
Applications for loans are made on a
standard loan application form, and your credit union officers will give
any assistance required in completing this form. Loan applications will
then be considered by the loan officer or credit committee and decisions
made on a regular basis.
In deciding whether or not to grant the
loan, the committee or loan officer will take into account the members
record of saving and repayments, as well as ability to repay, and need.
Each credit union will have its own policy on conditions which should be
met before a loan is granted, such as length of membership. Once the loan
is granted, the member will be asked to complete a promissory note (which
is a legally binding document being a promise to repay the loan), and to
commit to regular repayments.
Remember- only members are eligible to
receive loans from your credit union.
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Planning and managing repayments
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Credit unions are
flexible with regard to repayment plans, though there are some legal
limitations to length and amount of loans. The member will be advised on
the best repayment plan to meet their own circumstances. Members are
generally advised to repay a loan in as short a time as possible. Should a
member experience difficulties in meeting repayment commitments, he should
immediately explain the situation to the credit union, which will treat the
matter sympathetically and in total confidence. Depending on the
circumstances, the loan will be renegotiated if possible.
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Interest on credit union loans
'Truth in Lending', with no hidden costs,
is the policy of the credit union movement.
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By law a credit union
cannot charge more than 1% per month on the reducing balance of a loan.
This represents an annual interest rate of 12.68% APR (annual percentage
rate). Credit unions do not charge fees or transaction charges. Some
credit unions may choose to charge even less than this 1% per month. Since
the interest is charged only on the outstanding balance of the loan, you
will pay even less if you repay in a shorter time than planned. Thus the
credit union gives you control of your own finances, even when you are a
borrower.
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Saving while repaying
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Members are encouraged to
continue saving at all times, even when repaying a loan. Remember that even
the smallest amount saved regularly grows quickly, and that your savings
and loan will be doubly protected by insurance. Savings not only help build
up your own fund but also contribute to the credit union's fund. 'What I
save today may help you to borrow tomorrow'.
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Advantages of borrowing with the credit
union
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When you receive a loan from your credit
union, you will find many advantages in comparison to other institutions:
- Your loan application will be dealt with
strictly on its own merits.
- Your repayments will be tailored to meet your
own personal circumstances.
- Your loan up to £15,000 will be insured at no
direct cost to yourself, this cover can extend up to £30,000 under
certain conditions - check with your own credit union for details.
- The interest rate you pay will be reasonable,
and interest will be payable only on the reducing balance of the loan.
- The repayment schedule can be adjusted to
meet your own changing circumstances if necessary.
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Insurance
Loan Protection Insurance
Repayment Protection
Insurance
CREDIT
UNION LOAN PROTECTION / LIFE SAVINGS
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Credit unions make
available Life Savings and Loan Protection insurance cover on the lives of
eligible saving and borrowing members. There is no additional cost to the
member. The Insurance is underwritten by a credit union owned insurance
company, ECCU Assurance Co. Ltd.
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Life Savings insurance
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Life Savings insurance is the life
insurance cover a credit union provides for its eligible members as an
additional incentive for them to save regularly in the credit union. The
amount of insurance benefit to which a member is entitled is in proportion
to the amount of savings the member has, and depends on the member’s age at
date of lodgement. A member is eligible for the insurance cover carried by
the credit union if when he saves he is:
- Under the age of 70 years
- Actively at work, or if not working, in good
health.
In the case of joint accounts the member
eligible for cover is the member whose name appears first on the credit
union’s ledger records. Once earned, the insurance remains in force - as
long as you leave your savings in the credit union.
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Loan Protection insurance
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Everyone is nowadays advised to take out
insurance to cover outstanding loans in case of death or permanent
disability. In credit unions the savings and loan balances of all eligible
members are automatically covered (up to certain limits) at no extra cost
to the member. This means that you can borrow in the full confidence that
your dependants will be protected against this debt in extreme
circumstances. There are added advantages to this insurance, and some
special conditions.
Loan Protection insurance is the
insurance cover a credit union provides on the lives of its borrowing
members.
Should an insured borrower die, or (under
most contracts) become totally and permanently disabled, the insurance
cover provides that the loan is repaid in full. If a credit union member -
who is eligible for insurance cover and who has signed a promissory note -
dies with a loan outstanding, the loan balance is paid in full by the
insurer.
You will be informed at the time of the
loan application if your loan exceeds the amount covered by the credit
union's policy.
Under the basic policy death cover ceases
on the eligible member’s 70th birthday. The credit union has the
option of extending this age limit to the member’s 80th birthday
by effecting cover under the Over 70th rider. Disability cover ceases
on the eligible member’s 60th birthday. There is no facility for
increasing this age limit.
In the case of joint accounts, the member
eligible for cover is the member who signs the promissory note first.
Please note, both for Life Savings and
Loan Protection insurance:
- You must check with your own credit union for
details of cover provided in its case.
- Your credit union pays the premium out of its
earnings. In other words, members pay no individual charge
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OTHER
CREDIT UNION INSURANCE SERVICES
HomeUnion (Not presently offered by Larne
Credit Union)
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HomeUnion is the home insurance package
designed to cater for the needs of credit union members. This product
provides a contents sum insured of 50% of the buildings sum insured at
extrememly competitive rates. Building or contents only policies can also
be provided. Generous discounts are available. This service is available
through participating credit unions.
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AutoUnion (Not presently offered by Larne
Credit Union)
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AutoUnion is a motor insurance
arrangement for crdit union members put in place by the Irish League of
Credit Unions. Further details are available from credit unions offering
this services.
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Death Benefit Insurance (DBI) Rider
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This additional cover is available to
credit unions as an optional extra to the Life Savings Policy. The service
provides for a benefit of between £1,000 and £2,500 to be paid on the death
of the member.
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Repayment Protection Insurance (RPI) (Not
presently offered by Larne Credit Union)
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RPI provides for a member’s loan
repayments to be met if the member is out of work as a result of accident,
illness or redundancy / critical illness. It is anticipated that most
credit unions will be in a position to provide this cover in the near
future.
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Star Plan Travel Insurance (Not presently
offered by Larne Credit Union)
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In response to member demand, a scheme to
enable credit unions to provide travel insurance to their members has been
developed. Offering a broad range of cover at a competitive premium, this
service provides the credit union member with additional peace of mind when
planning to travel either abroad or in Ireland.
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OTHER
CREDIT UNION SERVICES
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Credit unions provide many other services
to their members, such as foreign exchange, money transfer, saving stamp
schemes etc. Please contact your local credit union to check their range of
services.
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