Beat Bank Charges With New Current Accounts!

Some little-known banks go the extra mile to help prevent you being charged for unauthorised payments.

Credit Unions aren't well-known, but they often go the extra mile for their customers, and some are now offering current accounts.

If you don't know what Credit Unions are, they are financial co-operatives owned and controlled by their members. Members of each Credit Union have a common bond, which might be the type of job (e.g. transport workers) or it might be geographical (e.g. Leeds).

The common bond, I believe, makes people in Credit Unions more responsible with their money. Furthermore, they operate on a not-for-profit basis, with surpluses being returned to their members, so you can rest assured that no shareholders are trying to swindle money out of you!

Till now, Credit Unions offered savings accounts and loans, but since January some have been piloting current accounts as well. With these accounts you:

• Can have your salary, pension or benefits paid in directly
• Can use an ATM card or even a debit card
• Can set up direct debits and standing orders
• Get free withdrawals at LINK ATMs (£2 or 2%, whichever is greater, elsewhere)
• Have free easy access to your Credit Union savings
• Have free easy access to Credit Union loan funds.

Unfortunately, you can't get a cheque book. However, as you also don't have an overdraft facility, it forces you to be more disciplined and most of us could do with a bit more financial discipline!

You get caring service

This is where Credit Unions come into their own. As one of them says: 'At any time if you know you are running into financial difficulties, please contact us and we will do our best to help. Don't wait until payments are going to bounce, call us first!'

Take the example of David Sinclair. He opened a current account with Glasgow Credit Union (GCU). He said:

"A Direct Debit was due to come off my GCU current account, and I didn't have enough funds in my account to cover it. Luckily, GCU phoned me to advise of this, and then transferred funds from my Credit Union savings account into my current account to cover the direct debit. My old bank would have hit me with about £50-worth of charges."

Now that's service! It remains to be seen whether that phone call is going to be a standard service for GCU members. Plus each Credit Union's level of service will be different. However, it's an illustration of the sort of organisations you're dealing with.

Credit Union current-account charges

Some, but not all, Credit Unions charge a monthly fee for current accounts, but that's a lot fairer than charging the poorest people excessive fees for bounced payments. And it looks like the fees are low. Here are a couple of examples:

Scotwest charges just £3 per month and Leeds City has no monthly charge at all. If items are not processed due to their being insufficient funds, these Credit Unions will charge £15. It's not a small amount, but it's not as hefty as regular banks either. Plus, you're not charged interest on it.

I think that the £15 charges could well be justified with Credit Unions, because you can expect a great deal more help and support if you're struggling to pay your bills than you'd get with regular banks, and that support costs money.

One thing to be aware of is that Credit Union current accounts come with other charges; for example, you might get a free quarterly statement, but you have to pay £5 if you order a monthly one. Or you might have to pay, say, £8 to get a list of your direct debits. But they are very open about all their charges.

Joining a Credit Union

I believe these accounts are suitable for those who need financial support, perhaps as an alternative to a basic bank account, and to anyone who's simply had enough of giving the big banks their money.

If your account is always in the black, you'll probably get more benefit from a regular current account, provided you choose one paying a decent rate of interest, say AER 4.5%+.

To find out if you're eligible to join a Credit Union, search here: http://www.abcul.org/page/members.cfm. You'll then need to check with the Credit Unions that you're eligible for to see if they offer current accounts yet.

I think there should be a Motley Fool Credit Union. How cool would that be? We're all in this together, Comrade Fool!

> Compare current accounts.
> Creditable Accounts With Credit Unions
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