South Buckinghamshire Community Bank
Questions & Answerssheet
Q1) What is the main objective of opening a Credit Union Savings Account? (We are called South Bucks Community Bank which is a local trading name of M for Money Credit Union.)
Answer: This type of account encourages you to save on a regular basisand, as it is not instantly available, helps you to build up a buffer for rainy days or save for a particular need. You can open a basic savings account, or a combination of the accounts listed below under Q9.There is no minimum savings amount per week. Also after you have saved for three months you can apply to have a loan if you have a need to borrow. The Credit Union is a Co-Operative of all its members who are the savers and borrowers and it’s owners. The members elect the directors, who are unpaid volunteers who oversee the running of the Credit Union, at the AGM. Your money is safe and any profit (surplus)is given back to members in the form of a dividend.
Many people do not have any savings or may have a very small amount of savings. SBCB, as a credit union, encourages saving and enables you to save weekly or monthly either through a standing order from your bank account or you can pay in cash through a Pay Point which are normally located in Post Offices and other shops in the high street etc. Withdrawing the money takes a few days so people are not prone to take out the money on a whim.
Q2) What are the conditions for me to open a Savings Account?
Answer: As long as you are able to provide the ID (photo driving licence or passport), your National Insurance number and proof of your address (utility or bank statement) and live or work in the areas covered by the Credit Union, anyone can open a savings account. The maximum amount that you can save with a Credit Union is £10,000.
People who have had money problems in the past may find it difficult to open a savings account with a bank whereas the SBCB will open you an account as long as you can provide ID, utility bill and a National Insurance number.
You can open savings account very easily either on line through M For Money, by post or through a local Information Point providing face to face assistance. As you are dealing with a small organisation SBCB are very friendly and helpful, just a telephone call away.
Q3) How long does it take for my savings account to be opened?
Answer: We normally take a week for an account to be opened after you have completed the account application form and provided the proof of ID and address. We will write to you giving you your account details and if appropriate, Pay Point Card. Part of the application form is a standing order mandate which you need to complete if you wish to make payments through your bank account. If you wish to make cash payments we will provide you with a Pay Point card which you can use at many local stores.
Q4) How can I pay cash into my savings account?
Answer: We will provide you with a Pay Point Card if you would prefer to pay cash into your savings account. This card will enable to pay cash into your savings account at any Pay Point Location. (Do bear in mind that payments received this way costs the Credit Union for the issue of a Pay Point Card (£2) and are charged 40 pence per transaction so the Credit Union would prefer to have as much money into savings accounts by standing order or electronic payments to the Credit Union Bank Account at the Co-Operative Bank Sort Code 08-92-50 account number 50092495 - details on the account application form)
Q5) How much interest do I earn on my savings?
Answer: You don’t receive interest but can receive a dividend once a year depending on the Credit Union’s performance. This is normally payable in April after the Annual General Meeting when the members decide the dividend. For 2014the dividend was 1% for Member’s savings and 2% for Junior Member’s savings. Dividends have been paid every year since 2009.
Q6) How safe is my savings with this Credit Union?
Answer: All savings held by an account holder with this Credit Union up to £85,000 are guaranteed by the Financial Services Compensation Scheme.
Q7) How can I withdraw money from my savings account?
Answer: You can e mail or send an instruction by post to the Credit Union requesting the amount you want to withdraw. This amount can either be sent to you by cheque or paid to your bank account by BACS. (There is a possibility that the Credit Union may in the future be able to send the money to a prepaid visa card at a cost of 50 pence) Whilst we seek to make payments as quickly as possible to members it may take up to 7 days.
Q8) If I close my savings account after a few months will I still be entitled to receive a dividend?
Answer: If a dividend is awarded at the annual general meeting of the Credit Union then this will be paid to everyone who had a savings account balance during the previous year. The amount of dividend will be based on the balance and length of time of the savings account during the year.
Q9) What are the different accounts available?
Answer:
1) Share account which links to any loans i.e. the more in this account the bigger loan you can get.
2) Xmas account could be used for Eid, Diwali etc. We pay this out end of Nov usually but we could pay it out to suit the festival.
3) Holiday savings account.
4) Junior Account. Membership form completed in child’s name but signed by Parents/Guardian. Standing order mandate signed by Parents/Guardian.
5) Back to school savings account to help in September.
6) Loan account linked to number 1. Interest rates vary.
7) Child Benefit savings and loan plan. Interest rate 42.6% APR.
To be eligible for this offer you must join the Credit Union and have your Child Benefit paid directly to M for Money Credit Union. You can apply for a loan immediately and your funds will be available for withdrawal as soon as your first benefit payment has been received.
Borrow between £250.00 and £500.00 and repay it over up to 50 weeks. Repay £12.00 per week and save the rest. Once your loan is cleared then you can withdraw all or some of your savings, continue to save or start a new savings and loan plan.
Q10) When can I take a loan?
Answer: If you have set up a payroll deduction with your employers then you are able to apply for an introductory loan after you have started having payments deducted from your salary to your savings account? If you open a savings account directly with the Credit Union then you can apply for a loan up to three times your savings amount after you have saved for three months. The maximum that can be borrowed is £7500 over your savings balance (£17,500).You need to save with the Credit Union for at least three months before you can apply for a loan because the Credit Union has to satisfy itself that you can save regularly and be able to service any loan repayments in the future. If you are paying your Child benefit to the Credit Union then you can apply for a loan immediately.
Q11) How do I apply for a Loan?
Answer: You apply for a loan to the Credit Union in writing using an application form either on line or using a paper form to be sent to the Credit Union head office. The Credit Union will then consider your application including purpose for the loan, credit history, and ability to repay the loan. They will normally want the last two months bank statements to demonstrate that the household bills are being paid from this account. They will normally let you know of their decision and interest rate within 7 days of receipt of the loan application and supporting documents.
Q12) What is the maximum amount I can take for a loan and the term (Length of Time)?
Answer: The maximum amount of the loan to be taken is two to three times the amount in your savings account, up to a maximum of £ 17,500 for up to 5 years. You have to demonstrate that you can afford the repayment and interest amounts on the loan.
Q13) What interest rates do you charge on Loans and are there any other charges?
Answer: Interest rates are fixed and there are no other charges taken for the loan as we don’t charge any arrangement fee. The rate of interest depends on the loan amount (the larger the loan, the lower the interest rate) and length of the loan, ranging from a fixed rate of 4% APR upwards to 42% APR depending upon the size of loan and the member’s circumstances.
Here are some illustrations:
Terms of loan(months) / Loan of £1,000
(repayments) / Interest
(26.8% APR) / Loan of £2,000
(repayments) / Interest
(26.8% APR)
12 / £95 / £134.71 / £190 / £269.43
24 / £53 / £268.85 / £106 / £537.76
36 / £40 / £412.27 / £79 / £824.70
48 / £33 / £564.63 / £66 / £1,129.58
60 / £29 / £725.97 / £58 / £1,451.94
The monthly interest a Credit Union can charge is capped at 3% which equates to 42.6% APR.
The Credit Union has a responsibility to all its members to cover the costs of making loans by charging appropriate levels of interest. As the Credit Union is a co-operative, run for the benefit of its members, it endeavours to provide savings and loans to its members on appropriate terms bearing in mind it has to generate a surplus to provide a dividend for savers as well as cover costs and build up a reserve against any losses resulting from unpaid loans.
The loan balance can be drawn down in the form of a cheque or sent to your bank account by a BACS payment. You only pay interest on the outstanding loan balance.
If the member has had money problems in the past (bad credit rating) or limited financial history then they may only have access to door to door lenders charging rates in the region of 250% APR or payday lenders or on-line loan companies or even loan sharks who charge very high rates of interest in the region of 100s % if not 1000s %.
Q14) Do I continue to have to save regularly after I have taken a loan?
Answer: Yes, we expect you to continue to save regularly after you have taken the loan but you can obviously save lower amounts. This is so that you never get out of the habit of saving.
Q15) Can I prepay my loan at any time?
Answer: You can prepay your loan at any time without penalty and if your savings account reaches the outstanding loan amount then you can request the Credit Union to pre-pay your loan from your savings.
Q16) What happens if I die when I have a loan?
Answer: The Credit Union has a life insurance policy that will repay the outstanding balance of any loan where the borrower dies.
Q17) Can Members receive statements?
Answer: Yes, statements are sent out annually and can be sent out in between times on request.
Q18) Where can I join or get more information?
Tel Number:Website:Email:
020 8756 3866
Information Points:
Chiltern District Council Reception Area, Amersham
High Wycombe Library, Eden Centre
Farnham Common Library
Chesham Library
Burnham Library
Micklefield Library
“Our Place”, Gayhurst Road, Micklefield.
We offer an appointment system if you want to meet one of our volunteers face-to-face. Just ring 020 8756 3866 and say what area you live or work in.