DDs have advantages but also downfalls as illustrated here. But if you have online banking why bother with DDs at all? All you have to do is say ,once a week, log on are sort your bills out by direct payment, it is under your control then, you can check what has been paid in case something has been missed.

This is a mess. But was it wise to simply stop paying? You could have simply contacted your credit union, indeed it was your duty to so, and explain your situation and ask then to use your shares to clear your debt by way of a shares to loan repayment transfer. The loan would have been cleared and you could have withdrawn any shares that remained. Instead you simply stopped paying and broke the trust that the credit union granted you and hence the mess. Membership of any organisation is two way affair, you have duties and you gain benefits and both parties must act in good faith then there would be harmony. Ask yourself "did I act correctly?"

Strange that the so called "credit crunch" should affect a credit union. A "credit crunch" is that financial insitutions such as banks are finding it hard to borrow money on the wholesale market (intrabank lending) and therefore are relunctant to lend what money they have. Credit unions should not be affected at all by this as the money they have comes from their members and they do not have to borrow money from outside their membership, and this shoul dnot have changed. Of course credit unions can arrange an overdraft with their bank, just as any other bank customer but this may be expensive. It maybe, like many others, they are simply using the term "credit crunch" for their own purposes (whatever they may be). So firms are lying people off, cutting back on expenditure and so on which may or may not actually be due to the difficulty of raising finance but it is convienient to be able to say it the "credit crunch".

The provy have a top rate of 417%, but they are legal. I have some sympathy with them as door to door collection is very expensive and would be unnesssecery if people simply made the effort to walk to their nearest credit union. Granted you need to save with a credit union first before you can apply for a loan, simply think ahead a some point you will have a need to borrow, maybe even use part of your provy loan to start a credit union account and then at some suitable point in the future get a loan from the credit union to clear your debt with the provy. Credit unions do need to exercise great care, after all it is their members money they are lending out. I personally know of several cases where credit unions have allowed themselves to get carried away with their good will and advanced loans to people to clear their debt with the provy only to find that the new member did not make a single payment back to the credit union. Most things result from a two way transaction and it is not always clear who is the victim within a particular transaction.

It is difficult to comment on this one as there seems to be some confusion about exactly what is to be borrowed and what the terms are. The maximum a credit union can charge is 2% per month on a reducing balance, they can charge less. Now sure how a credit union can charge 5% on a reducing balance, that makes the charge around 2.5% in real terms, and pay 5% dividend. That would mean they can charge around £2.5 per £100 loan per year but payout £5 per £100 on shares per year!!!! Who is paying for all the costs of running the credit union?? Logically every member should borrow the maximum they can and deposit it as shares thus they would all be making money on the money the just borrowed. That cannot be right, but then "fractional reserve banking" exists and that makes money from generating debt.

As far as I am aware there is no legal requirement for a credit union or bank to carry out a credit check. Not even sure about the basic sense in paying say around £12 for a credit check when the interest the credit union would charge on a £200 would be around £13! But maybe you are applying for a large amount. But the basic thing is your record within the credit union. If you have had a few loans and have repaid them in a regular way whilst continuing to add a little to your savings then they should make decisions based on the relationship that you have built up over time. There is no need, or it would be rather silly to borrow money, from a back street lender; far better to try your friends or relatives if your credit union declines your application.

I know a little about credit unions. Each credit union is seperate entity thus having slightly different rules, but generally when you join a credit union you are starting anew and it is up to you to save and gain their trust, after all it will other members money you will be applying to borrow. Generally there is a relationship between how much money you have saved and how much you can apply to borrow. The limit is around 2 or 3 times the amount you have in savings (called shares), the maximum length of a loan is 3 years. Some credit unions may allow you to "top up", that is apply for another loan before you have fully repaid your first loan. Generally no credit check is carried out as they may cost more that the actual interest that the credit union may earn from the loan overall, I suspect few loans would be granted if credit checks were routine. Overall you know yourself, are you trustworthy? Are you trusting? Your savings will form part of a "common pool" from which you and other members maybe granted a loan. The amount of bad debts vary between credit unions, and these are written off from the profits or operating surpluses of the credit union. these "profits" arise from the interest charged on loans to members. A well run credit union, with good trustworthy members, would maybe have a bad debt level of 1 to 2%. The Law is that , after costs and topping up statutory reserves the rest of the "profits" are returned to the members in the form of a dividend. The actual level of divident will of course depend on how well the credit union has operated that year, but typically it maybe around 1-4% which is good when you consider most commerical banks are paying 0.1% on current accounts. Charges; generally there are no charges (except the interest on loans noted earlier), some credit unions may levy an annual subscription charge up to £5 per year. As when any business there are many bodies who have the right to claim money from then, credit unions are not exempted from this tendency. Agencies that need to be paid are the F.S.A, inland revenue, but not on interest earned from members but interest earned from commercial banks on the credit unions deposits with them, but there are some very reasonable banks such as the Co-op or Unity Bank. Plus of course some credit union do have paid staff and their own premises to maintain which need to be financed from the operating "profits" plus there is a form of statutory insurance in place to protect members fromwrng doing by the credit union staff/volunteers. Some credit union are affiliated to a "Trade Body" , such as ACE credit union services, or ABCUL they does this to obtain training and or support plus access tothe insurance noted. There exists a body called The National Association of Credit Union Workers, often employed by Local Authorities to help local groups set up credit unions. The F.S.A website also has helpful material. As to the costs involved in setting up a credit union the generally quoted figure is around £5,000. Generally to meet the costs and make the whole process worthwhile you would need at least 100-200 potential members, there are smaller credit union but you should aim to last beyond the first group of pioneers. Some credit union are quite large and have turnovers in the £millions. If there is a credit union near you maybe you should check it out. With some you can pay by cash, standing order, directly from your wages and with some you can have state benefits paid paid in directly. Whatever you do you should to some extent be proactive in your financial affairs rather that just think about them when things go wrong for you.