1st Alliance (Ayrshire) Credit Union: savings, loans and joining

1st Alliance (Ayrshire) Credit Union is a credit union based in the west of Scotland that trades as 1st Alliance Community Bank. It is a financial co-operative run by members for members, and it offers the two things every credit union offers: somewhere to save and somewhere to borrow¹. Membership is open to people who live or work in the West of Scotland, and to their family members through the junior accounts³.

The savings account is called a share account, because each member owns a share of the credit union rather than being an ordinary customer¹. On the borrowing side it offers a personal loan and a debt consolidation loan, both from £500 to £15,000⁴. There is no upfront membership fee, and the credit union says there are no hidden fees or transaction charges¹. It does charge an annual service fee, taken from the share account in September, and sets a minimum balance to keep membership active¹.

Money held with it is covered by the Financial Services Compensation Scheme, the same scheme that covers banks and building societies, and the credit union states that all members' monies are 100% safe as it has full FSCS protection¹. The sections below set out each product, how the charges work, how to join, and what happens if a repayment is missed.

What 1st Alliance Community Bank offers its members

1st Alliance Community Bank describes itself as a financial co-operative run by members for members, and as a local financial co-operative with local people and local communities at its core¹. That structure is what separates a credit union from a bank: members are the owners, and the credit union exists to serve them rather than outside shareholders².

The product range is deliberately narrow. There is a share account for saving, a personal loan, and a debt consolidation loan¹. Members also get free loan protection insurance on borrowing, provided by the credit union to eligible members rather than sold as a separate policy⁴. That is a common feature across the movement: Kildress Credit Union says all loans granted are insured by the credit union with no cost transferred to the member, and Islay & Jura Credit Union says all members automatically enjoy free life savings and loan protection benefits⁸.

Credit unions generally are small compared with banks. There are around 400 credit unions across England, Scotland and Wales, and most local areas have one¹⁰. All of them offer savings and loans, and many add junior savings accounts, Christmas savings accounts, prepaid debit cards, insurance products and cash ISAs². 1st Alliance's own range is the core two products plus junior accounts, so anyone wanting a current account, a mortgage or a credit card would need to look elsewhere. For the wider picture of what the sector offers, see credit unions: a complete guide.

The share account: how saving and dividends work

Every member gets a member account called a share account, which works as a savings account and represents your share of the credit union¹. Savings in a credit union are called shares because each member is also a shareholder and owner, and every £1 saved is the equivalent of one share¹³. Salford Credit Union puts it the same way: you open a savings account called a share account because each member owns a share of the credit union¹⁵.

The return on that money is not interest in the usual sense. 1st Alliance says interest on savings is paid in the form of a yearly dividend, and that an annual dividend may be paid on the share account, gross of tax, subject to surplus, with the rate decided at the annual general meeting¹. A dividend is not guaranteed and is not fixed in advance. Across the movement the wording is consistent: Drumchapel Credit Union says the dividend is recommended by the board of directors and authorised by members at the AGM, Salford Credit Union says it is dependent on performance, and Orchard Credit Union simply lists an annual dividend credited to the account¹⁶.

The idea behind it is that a credit union's surplus is shared among savers rather than paid to outside shareholders, with some kept back to improve services². MoneyHelper describes credit union savings accounts as either paying interest or a share of any profits¹⁹. For a saver, the practical points are that the return can vary year to year, that it is decided by members at the AGM, and that the account is a savings account rather than an investment. For how these accounts compare with ordinary savings, see savings accounts: a complete guide.

Personal loans from 1st Alliance

Repayments can be made weekly, fortnightly, four weekly or monthly, so the schedule can be matched to how you are paid⁴. The credit union states that it only lends when borrowers can afford full repayments, protecting members' money⁴.

Applying is a two-stage process. If you are an existing registered member you can make a full application online, or you can come into any office or apply by phone⁴. Before a decision, 1st Alliance says it will look at your credit file together with you, which means you need access to your credit file through a service such as ClearScore or Credit Karma, and this is done over a Zoom call or at an office appointment⁴. That is unusual among lenders and reflects the mutual model: the assessment is a conversation rather than an automated score.

Credit unions as a sector lend smaller sums than banks on the whole. Independent guidance describes credit union personal loans of up to about £3,000, and small loans of around £50 to £3,000, though individual credit unions set their own ceilings and 1st Alliance's is higher²⁰. Voyager Alliance lends up to £10,000 to all members with no savings required, Darlington Credit Union lends up to £15,000, and Just Credit Union caps a first loan at £600²². The pattern is that credit unions price loans to be affordable rather than to maximise margin, and offer products suited to individual needs²⁵. For how these compare with other borrowing, see loans: a complete guide.

Debt consolidation loans

The debt consolidation loan also runs from £500 to £15,000 and is designed to bring existing debts together into one repayment⁵. Consolidation is a well-established use of credit union lending: Darlington Credit Union offers a personal loan for debt consolidation, and Just Credit Union runs a loan of up to £1,200²³.

It is worth being clear about what consolidation does and does not do. It replaces several repayments with one, which can make a budget easier to manage, but it does not reduce the total debt, and if the new loan runs longer than the old ones the total interest paid can be higher. National Debtline and Business Debtline both publish guidance on consolidation in Scotland and in England and Wales, and the two jurisdictions have different routes into debt solutions²⁶. StepChange also warns about the cost of short-term borrowing as an alternative²⁹.

Where a credit union loan is used to repay more expensive borrowing, the saving comes from the difference in cost between the two, not from the consolidation itself. Anyone weighing it up should compare the total repayable on the new loan with the total left on the old debts, and check whether any of the old agreements carry an early repayment charge. Early repayment charges on other kinds of borrowing are usually a percentage of the overall loan that reduces over time³¹. For the wider subject, see debt: a complete guide to help, solutions and your rights.

How the charges work

1st Alliance says there are no hidden fees or transaction charges, and there is no upfront membership fee⁶. What it does charge is an annual service fee, taken from the share account in September¹. Because it comes out of the share account rather than being billed separately, a member who keeps a low balance needs to allow for it. The credit union's own site carries the current amount.

There is also a minimum balance rule: you must keep a minimum of £10 in your account to keep your membership active¹. The credit union recommends an initial deposit of £1.00 when joining, and asks for £5 to start your membership when you join in an office, with minimum share deposits of £2 weekly, £5 fortnightly or £10 monthly¹. The maximum you can have deposited with the credit union is £20,000 across all accounts¹.

Credit unions handle charges in different ways, and it is worth knowing the range. Cardiff & Vale Credit Union does not apply its charges to members who currently have an active loan with it³². The common thread is that credit union charges tend to be flat and modest rather than percentage-based, and are set by the members themselves. For today's figures on any of these, the credit union's own site is the place to check.

Who can join: living or working in the West of Scotland

Membership is open to anyone who lives or works in the West of Scotland, and the credit union lists the postcode areas KA, PA, ML and G as the areas it covers³. That is the credit union's common bond, the link that all members share. All credit unions in the UK may only accept members who have a common bond, and membership is based on it³³. The bond can be a place, an employer or an association, and it is what makes a credit union different from a bank open to anyone²².

If you are outside those postcodes, the practical step is to find the credit union whose bond covers you. The Building Societies Association's consumer factsheet points to www.findyourcreditunion.co.uk as a way to locate one, and StepChange suggests visiting the Association of British Credit Unions' website or calling 0800 015 3060². Most local areas have a credit union¹¹. Thistle Credit Union, for example, has over 4,000 members across the West of Scotland, and Baillieston Credit Union is open to anyone who lives or works within its area³⁴.

Leaving the area does not necessarily end membership. Drumchapel Credit Union states that if a member leaves the common bond they are able to remain in membership as a non-qualifying member¹⁶. Rules on this vary between credit unions, so it is worth asking before assuming. For how the sector is organised across the UK, including the differences in Scotland, Wales and Northern Ireland, see credit unions: a complete guide and money in Scotland, Wales and Northern Ireland.

Junior accounts for children

1st Alliance offers junior accounts for children from birth to 16 years, and the adult opening the account must already be a member³. That requirement is common: the adult is the existing relationship with the credit union, and the child's account sits alongside it.

Other credit unions set their age limits in similar places. Larne Credit Union lets parents open savings accounts for children under the age of 16¹⁴. Falkirk District Credit Union offers junior accounts for under 18s which cannot be opened online, and asks the adult to visit the office with the child's birth certificate or passport as ID⁸. Community First Credit Union runs a Young Savers account to encourage saving for juniors, and Moray Firth Credit Union lets you open an account for any junior member of your family³⁶.

The practical points for a parent or grandparent are that junior accounts are usually opened in person rather than online, that the adult needs to be a member first, and that the child's own identification is needed. Junior accounts are one of the additional products that many credit unions offer alongside the core savings and loans¹². For children's savings more generally, including tax-free options, see savings accounts: a complete guide and ISAs: a complete guide.

How to join and apply for a loan

Joining starts with the membership application. 1st Alliance asks for £5 to start your membership when you join in an office, and for online applications it uses an ID check that prompts you to take a selfie³. Once you are a member you get a share account, and the minimum share deposit is £2 weekly, £5 fortnightly or £10 monthly³.

The sequence for borrowing is:

1. Join the credit union and open a share account, if you are not already a member³.
2. Register for online access, or plan to apply in an office or by phone⁴.
3. Complete the loan application, online if you are an existing registered member⁴.
4. Provide the documents the credit union asks for⁴.
5. Go through the credit file review, by Zoom call or at an office appointment⁴.

The documents for a personal loan are the most recent three months of bank statements; two recent payslips if you are employed; and your most recent set of accounts plus latest tax returns or self-assessment notice if you are self-employed⁴. You also need photo ID such as a driving licence or passport, and proof of address such as a utility bill or bank statement dated within the last three months⁴.

Other credit unions ask for similar evidence. Moray Firth Credit Union wants three recent and consecutive bank statements and wage slips on paper, plus household income and expenditure and DWP or PIP award letters³⁸. Kildress Credit Union requires a first-time loan applicant to meet a member of the credit committee before any loan is issued³⁹. Community First Credit Union asks for a Universal Credit breakdown of award entitlement where that applies⁴⁰. The pattern across the sector is that a first loan involves more paperwork and more conversation than a later one.

Paying in, withdrawing and transferring money

Money can be paid in by cash, debit card or cheque at the office, by telephone using a debit card, by standing order, or by payroll deduction where your employer has a partnership with the credit union¹. Same-day payments can be made using the credit union's faster payments service, which needs your registered bank account details and can be requested by telephone, in branch or through CU Online¹.

On withdrawals, 1st Alliance says you can withdraw up to £100 in cash from your savings at any time through its office, subject to any loans secured against shares¹. Larger amounts are handled by transfer rather than cash. Credit unions generally offer several withdrawal routes: cashing a cheque at a local Post Office, cash from the credit union office, payment directly into a bank account, or a debit card at a cash machine where the credit union operates a current account². Baillieston Credit Union pays by cash or bank transfer, and Cardiff & Vale Credit Union takes withdrawal requests online, by telephone, in person using a share withdrawal request form, or by post, paying into a nominated bank account or onto a prepaid debit card³⁵.

Moray Firth Credit Union describes withdrawal as a simple process with no hidden charge, paid in cash, by cheque or by BACS into your nominated bank account³⁷. The practical point for a member is that a credit union is not a high street bank with a branch on every corner, so it is worth knowing in advance which withdrawal route you will use and how long it takes. For the wider picture on payment methods and accounts, see current accounts: a complete guide and everyday money tasks.

If loan repayments are missed

1st Alliance states that if you do not meet the repayments on your loan, your account will go into arrears, and that this may affect your credit rating, which may limit your ability to access credit in the future⁴. Its membership terms go further: loan default will result in transfer of shares and, if required, any other balances³. In other words, savings held with the credit union can be used against the debt.

That is a feature of credit union lending rather than a penalty unique to this one. Independent guidance states that if you miss payments on a loan, the credit union may be able to use your savings to repay the loan²⁶. Kilkeel Credit Union and the Celtic Credit Union first-time borrower loan use the same arrears wording as 1st Alliance⁴¹. Kildress Credit Union says that once you miss an agreed repayment your account will be in arrears, and if it persists the account is brought to the attention of the credit control committee³⁹.

Missing payments also affects what you can borrow next. Moray Firth Credit Union will not grant a top-up loan if there have been missed payments on the original loan with no satisfactory explanation³⁸. If you are struggling, the earlier you talk to the credit union the more options there usually are, and free help is available: StepChange, National Debtline and Business Debtline all give free debt advice, and the MoneyHelper service covers everyday money questions¹¹. For the full picture of rights and solutions, see debt: a complete guide to help, solutions and your rights.

How members' savings are protected

Savings with 1st Alliance are covered by the Financial Services Compensation Scheme, the UK's deposit guarantee scheme, in the same way as savings with banks and building societies¹. The credit union states that all members' monies are 100% safe as it has full FSCS protection¹.

That protection is a feature of credit unions generally, not just this one. The Building Societies Association states that your savings are protected by the Financial Services Compensation Scheme². Larne Credit Union says savings are protected by the FSCS, Thistle Credit Union says member savings are protected under the FSCS, and Cardiff & Vale Credit Union says savings are protected in the same way as savings with banks and building societies, adding that credit unions are also fully insured against fraud¹⁴.

On the regulatory side, 1st Alliance Community Bank is regulated by the Prudential Regulation Authority and the Financial Conduct Authority, and the FCA Register lists 1st Alliance (Ayrshire) Credit Union Limited as authorised since 6 February 2004, with 1st Alliance Community Bank as its current trading name and 1st Alliance Credit Union Ltd as a previous name¹. It also appears on the Bank of England's list of credit unions incorporated in the UK⁴⁴. The FCA Register entry gives the firm reference number 228296, which is the number to quote if you need to check the firm's status or complain⁴³.

If something goes wrong with a credit union and you cannot resolve it with the firm, the Financial Ombudsman Service can look at complaints from consumers. For how that works alongside the FSCS and other protections, see consumer protection in UK financial services and credit unions: a complete guide.