Saving with a credit union can seem much better than using a standard high street bank. With better savings perks and loan rates than banks, a credit union is a no-brainer for many.
So, what are the credit union max savings available if you want to save up? Let’s take a look in this article.
What is the credit union savings limit?
Credit union savings accounts aren’t that different from ‘normal’ bank accounts. With services like online banking, interest, and even convenient apps. But what is the maximum amount you can save in a credit union?
This depends on the credit union you become a member of. Different credit unions will have different maximum savings limits.
What does the saving limit depend on? Some examples of factors:
- The size of the credit union
- The credit union’s common bond
- Other accounts you have with the credit union
Metro Moneywise’s maximum savings credit union account limit is £12,500. You can pay in up to £350 per month or lump sums of up to £1500 over a rolling 12-year period.
Why is there a limit?
How much money can you save in the credit union? The credit union might control certain aspects of how much you can pay in at one time or how much you can hold in your account in total. Credit unions have to abide by certain laws which affect their members. One such law is a regulatory requirement for all credit unions to place 8% of all money invested into a ‘reserve’.
The higher the value of money saved in the credit union, the more money that needs to go toward this reserve. This affects members because less money is paid out in dividends and interest from credit union loans.
So, how do credit unions protect their members and ensure they get the most out of saving their money in the cooperative? One way credit unions manage this is to put a limit on how much money can be saved by each member. This limit is imposed as an absolute cap on savings per account or as a limit on how much you can save every month/week/year.
Because a credit union is owned by its members, the members are always the priority. So, this is done in the best interest of all the members and to keep the credit union running as sustainably as possible.
How are my credit union maximum savings protected?
Credit unions are member-owned. When members pay savings into the credit union, they lend those savings to other members who take out loans. The interest accumulated goes back to the members (and pays for the running costs). So, what happens if something goes wrong?
Members of credit unions and bank account holders are protected by the FSCS by up to £85,000. This means you don’t have to worry if your credit union goes bankrupt or something happens that means they can’t pay you your money.
Compensation from the FSCS is automatic, and you should get your money within seven days. While all credit unions should be covered, it’s important to check whether and how the FSCS protects your credit union so you can look after your money in case anything ever goes wrong.
Read our article How to Find the Best Credit Union for Savings Account to get the most out of your savings.
Maximum Savings in a Credit Union vs in a Bank
There’s no limit to the amount of money you can save in most banks. But the FSCS will only protect up to £85,000 of your money held in a bank. When considering the advantages and disadvantages of banks and credit unions, remember this is the same for all credit unions too.
Find out more about how credit unions are regulated in our blog.
While there’s no limit on the savings you can put into a bank account, credit unions are known to have better interest rates than banks. The Bank of England interest rate is currently 1.75% (at the time of writing). Dividend rates for credit unions are generally 1-3% but can range from 0% to 8%. If you shop around, you may well find a better interest rate at a credit union than at a bank.
In addition to more attractive rates, credit unions have fewer account holder charges than banks. This is one of the many benefits of saving with a credit union. Read our article Should You Open a Credit Union or Bank for Savings Account? to help you make your mind up.
Is there a minimum limit to savings with a credit union?
Credit unions make it easy for you to open a savings account and start to gain financial independence. But there are some requirements you must abide by. Most credit unions have a minimum requirement to keep a savings account open. Metro Moneywise has a minimum of £5 deposit per month.
The reason for the minimum limit is also because of the way the credit union is owned. Because the members own the credit union, they each have one share in the company. Credit unions must set a ‘par value’ for a share in the company. In order to maintain their share, a member must maintain an account balance that is greater than, or equal to, the par value of the one share they own.
Par value is relatively low, usually in the range of £5–£25. For many, it’s a worthwhile investment to a better financial position.