Credit unions are topping the savings charts – what are they and how do they work?
MY COMMUNITY BANK, a credit union, is top of consumer group Which?'s one and three-year fixed savings best buy tables.
It is offering a one-year fixed-rate bond paying 2.10 per cent AER, a two-year fixed-rate bond paying 2.25 per cent AER and a three-year fixed-rate bond paying 2.40 per cent AER.
The one-year bond is 0.08 per cent higher than the next best available rate.
While the three-year bond is the joint top-paying rate with Tandem Bank.
But unlike Tandem Bank, My Community Bank's rate is not available for everyone due to its credit union status.
It's only available to people who work in what the Office for National Statistics calls "minor" occupations.
This includes professions such as architects, electricians and childminders. The full list is available .
We look at what credit unions are and how they work below.
Who can use a credit union?
Credit unions are community savings and loan cooperatives, where members pool their savings to lend to one another and help to run everything.
Members of a specific credit union always have something in common, usually geography, profession or membership of a specific employment union.
If you're not eligible for the My Community Bank savings bonds, it might be worth checking what savings products are available at unions you are able to be a member of.
You can find out which Credit Unions you're allowed to join on the website or by calling the Association of British Credit Unions Limited (ABCUL) on 0161 832 3694.
What can I use a credit union for?
Because credit unions are owned by their members and are not-for-profit, you can often get a better savings rate than you might get with a normal bank.
You can also use credit unions to take out loans, usually at a better rate than most high-street lenders.
Some unions require that you have already saved money with them before you can take out a loan, but others don’t.
Make sure that you still check what the interest rate is - they can be as low as 6 per cent or up to 43 per cent.
Will my money be safe?
Credit unions are regulated by the Prudential Regulatory Authority and the Financial Conduct Authority.
The Financial Services Compensation Scheme also protects savings up to £85,000 held with an individual credit union, as it does with banks and building societies.
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This means credit unions can be a really good alternative to doorstep loans. The Sun is campaigning to put a stop to rip-off credit.
Whether you're saving or borrowing it's always a good idea to shop around.
High street savings rates are particularly dismal at the moment as very few banks have passed on recent base rate rises onto customers.
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