1st Class Credit Union

1st Class Credit Union is a member-owned credit union that lends to its members and pays a share of its surplus back to them. Its main product is a personal loan of £500 to £25,000, and it also runs a Credit Builder loan, a Season Ticket loan of £500 to £4,000 over 12 months, and other seasonal lending¹. It states that it charges no account fee and no hidden fees or transaction charges⁴.

Membership is the gate to everything it offers. Credit unions in the UK may only accept members who share a "common bond", which is usually an employer, an occupation or a locality⁵. Once you are in, you can save, borrow and take part in the dividend. Savings are protected by the Financial Services Compensation Scheme up to £120,000 in total across all accounts you hold with the credit union⁶.

The credit union is authorised by the Financial Conduct Authority under firm reference number 213700, and it appears on the Bank of England's list of UK-incorporated credit unions⁷. It was previously known as Scottish Postal Workers Credit Union Limited, so anyone who joined under that name is a member of the same organisation⁷.

What 1st Class Credit Union offers members

The credit union's lending is built around members' own savings. Members' savings are used to fund loans to other credit-worthy members, which is how the model works across the sector⁹. 1st Class Credit Union states that all loan profits are returned to members¹⁰. Credit unions are not-for-profit community lenders providing affordable loans and savings, and surplus income is returned to members by way of a dividend or directed into improved or additional services¹¹.

Alongside borrowing, the credit union offers savings accounts and a set of member benefits that include a discount club, an annual dividend on savings, regular saver rewards, online access to your account 24/7 and what it calls Platinum Award Service¹². It holds a 5* Fairbanking Mark award¹.

The range is narrower than a bank's. Credit unions generally offer loans, savings and current accounts, and many add junior savings accounts, Christmas savings accounts, prepaid debit cards, insurance products, cash ISAs and in some cases mortgages⁹. Where a credit union sells insurance it does not underwrite, the cover comes from an insurer, and the terms that apply are the insurer's. For the full picture of how these providers work, see Credit unions: a complete guide.

Saving with 1st Class Credit Union: regular deductions and annual dividend

Saving is the entry point. You can start with as little as £4 per week or £16 per month¹⁴. The Faith Friendly Savings Club is open to existing members of 1st Class Credit Union¹⁴.

Credit unions normally pay a dividend once a year rather than interest, and the amount depends on how much you have saved and how much profit the credit union has made¹⁵. A successful year could see members receive a dividend as high as 3%⁹. Profit shares distributed among members annually are known as a dividend¹⁷. Share-based accounts pay an annual dividend rather than interest, while variable-rate accounts pay interest annually¹⁴.

That structure matters when you compare it with a bank account. A dividend is not a fixed rate and is not guaranteed: it is declared after the year's results are known. For how savings accounts generally work, including notice periods and withdrawal terms, see Savings accounts: a complete guide.

Personal loans and how the amount you borrow is set

The 1st Class Personal Loan runs from £500 to £25,000¹. Members can apply for a loan between £500 and £25,000². Repayments are taken by payroll deduction or Direct Debit¹.

How much you can borrow is not simply a matter of what you ask for. Across the sector, a credit union member can usually borrow at least two or three times the amount held in savings, depending on that credit union's loan policy¹⁸. Some credit unions lend as soon as you become a member, while others lend only after you have saved for a set period, and affordability is checked against the money you have left after paying bills²¹. Credit unions are known for personal loans of up to about £3,000, and are willing to lend smaller amounts that many banks will not²².

A personal loan is a fixed amount borrowed from a lender and repaid in fixed amounts over an agreed number of months or years²³. Before committing, it is worth reading how the product type works in general, including what happens if you repay early: see Loans: a complete guide.

Credit Builder, Season Ticket and seasonal loans

The Credit Builder loan is aimed at members who want to establish a borrowing record. The credit union states plainly that it cannot guarantee this product will build your credit¹². That caveat is worth taking at face value: no lender can promise an outcome that depends on how a credit reference agency records the account.

The Season Ticket Loan lets you borrow between £500 and £4,000 over 12 months to secure your place for the season, and the credit union says you build up your savings while repaying the loan³. It covers football, rugby, ice hockey, cricket or another sport³. Free loan protection insurance is included, with terms and conditions applying³. Where a credit union includes loan protection insurance, the cover is provided by an insurer rather than by the credit union itself, and the policy terms govern any claim.

The credit union also lists other seasonal and purpose lending, including a secured loan¹⁰. Its loan calculator lets you set a repayment frequency of weekly, fortnightly, four weekly or monthly¹.

Fees and charges: how borrowing costs work

1st Class Credit Union states that there are no hidden fees or transaction charges¹. It also states that it does not charge an account fee⁴. That is a feature of this provider, not a rule of the sector: a credit union current account might carry a monthly fee²⁴.

On the cost of borrowing itself, the law sets a ceiling. At that 1% per month cap, the associated total charge for credit is 12.68%¹⁶.

Credit union loans generally do not incur set-up fees, administration costs or early redemption fees, and are often cheaper than most other providers for smaller amounts²³. That contrasts with overdrafts, where banks charge a monthly fee and a setting-up fee, making them an expensive way to borrow²⁵. For today's figures on any 1st Class Credit Union product, its own site is the place to look.

That is a ceiling, not a price: what you are actually charged depends on the product and the credit union's own policy.

Who can join and when you can apply for a loan

All credit unions in the UK may only accept members who have a "common bond"⁵. Membership is based on that bond, which is typically an employer, an occupation or a place⁹. For 1st Class Credit Union, the practical question is whether you fall within its bond, and the credit union's own site sets out the current position.

Once you are a member, membership tends to be durable. One credit union states that once you are a member you can remain a member even if you move outside the field of membership²⁶. Another states that members who joined under a previous geographical bond keep valid membership and do not need to requalify²⁷. If your circumstances change, confirm your position with the credit union rather than assuming.

Family access is common across the sector: as long as one member of a family meets the common bond requirements and has joined, other family members living at the same address can usually join too²¹. Lending eligibility varies: some credit unions lend as soon as you become a member, others only after you have saved for a set period²¹.

Paying in by payroll deduction or Direct Debit

Repayments on a 1st Class Personal Loan are taken by payroll deduction or Direct Debit¹. Signing a loan agreement with a credit union typically means agreeing to repay the loan plus interest in instalments by payroll deduction or Direct Debit²⁸.

Across the sector, members can pay in directly by payroll deduction or through benefit direct accounts, through retail payment networks such as PayPoint and PayZone, by standing order or Direct Debit, or in cash at local offices and collection points⁹. Direct payment from wages by payroll deduction, Direct Debit or standing order, cash at a credit union office or collection point, state benefits paid in directly and PayPoint cards in some places are all common routes⁶.

Payroll deduction is the method that distinguishes credit unions from banks for many members: the money leaves before it reaches your current account. If you change employer, the deduction stops, so the repayment method needs to be rearranged. For the mechanics of moving payments between accounts, see Everyday money tasks: a step-by-step guide for UK consumers.

Withdrawing savings while you have a loan

Savings and borrowing are linked at a credit union. 1st Class Credit Union states that your savings grow while you pay back your loan balance¹.

The constraint is that savings can be pledged against the loan. One credit union's terms state that while any part of a loan or interest on it is outstanding, the credit union shall retain your shares up to the value of the outstanding loan, and you may not withdraw those shares until the loan and interest are repaid in full²⁸. Another states that you cannot withdraw from a membership account pledged to a loan until your outstanding loan is less than the amount in the account²⁹. Elsewhere in the sector, share account withdrawals are allowed at any time unless the savings are secured against a loan²⁶.

The practical effect is that money you have saved with the credit union may not be available to you while you owe it money. If you need access to savings at short notice, that is a reason to hold them somewhere else as well. For how withdrawal terms work on savings generally, see Savings accounts: a complete guide.

Member benefits beyond savings and loans

1st Class Credit Union lists a discount club, an annual dividend on savings, regular saver rewards, online access to your account 24/7 and Platinum Award Service among its member benefits¹². It holds a 5* Fairbanking Mark award¹.

Credit union current accounts commonly include, for free, paying in or taking out cash at the credit union, having money paid in such as wages, benefits and pensions, online, mobile or telephone banking, and budgeting advice and support²⁴. Some credit unions add junior savings accounts, Christmas savings accounts, prepaid debit cards, insurance products, cash ISAs and in some cases mortgages⁹.

The wider benefit is structural. Credit unions are not-for-profit, run by members to benefit communities rather than to make a profit²⁴. Surplus income is returned to members as a dividend or directed into improved or additional services⁹. Members' savings fund loans to other credit-worthy members⁹. For how this compares with a bank account, including what to weigh up, see How to choose the right bank account and Current accounts: a complete guide.

FSCS protection for your savings

Savings with 1st Class Credit Union are protected by the Financial Services Compensation Scheme⁴. The scheme protects up to £120,000 in total across all accounts you hold with the credit union, for individual account holders⁶. All shares, meaning savings, in an affiliated credit union are eligible for protection under the scheme³⁰. Credit union savings generally are protected by the FSCS²¹.

Two limits are worth knowing. The £120,000 applies per person across all accounts with that credit union, not per account, so splitting savings between several accounts with the same credit union does not increase the cover⁶. And the scheme does not cover everything a financial firm sells: credit insurance, for example, is not eligible for FSCS protection³¹. Where a credit union arranges insurance, the protection that applies is the insurer's, and insurance claims are handled under different rules from deposits.

If a credit union fails, the FSCS pays compensation to eligible depositors. For how the scheme works across products, and where it stops, see Consumer protection in UK financial services: a complete guide.

Contacting 1st Class Credit Union and complaining

1st Class Credit Union operates online, with online access to your account 24/7 listed among its member benefits¹². Its website is at 1stclasscu.co.uk, which is the address recorded on the FCA Register⁷. Contact details, opening hours and the current process for raising a complaint are set out on its own site.

If something goes wrong and the credit union does not resolve it to your satisfaction, you can take the complaint to the Financial Ombudsman Service, which is free and independent. The ombudsman looks at complaints about financial firms, including credit unions, and can order a firm to put things right. Before that stage, the firm gets the chance to resolve the complaint through its own procedure.

Free, impartial help with money questions is available from MoneyHelper, and free debt advice is available from the debt advice charities. If your complaint is about a loan decision rather than a service failure, note that a lender is not obliged to lend, and a declined application is not usually something the ombudsman can overturn.