Tay Valley Credit Union

Tay Valley Credit Union is a member-owned credit union based in Scotland. It is open to employees of Perth and Kinross Council, Angus Council and Tayside Contracts, and it offers two things: a savings account and loans to members. Saving is done through payroll deduction or directly, and loans range from small sums for new members up to larger amounts for members with savings¹.

Credit unions are not banks. They are financial cooperatives owned by their members, and all credit unions offer savings accounts and loans³. Members' savings are used to fund loans to other credit-worthy members⁵. That structure shapes almost everything about how Tay Valley works: who can join, how interest is set, what happens if you fall behind, and what you can do with your savings while you have a loan.

This page covers who can join, each of the credit union's loan types, how interest and charges work, how saving and dividends work, withdrawal rules, joining and leaving, cancellation rights, missed repayments, and how your money is protected.

Who can join Tay Valley Credit Union

Membership is built around a common bond, which in this case is employment. Employees of Tayside Contracts, Perth and Kinross Council and Angus Council may join¹. That is the qualifying link: credit unions require members to share a common bond, such as working for the same employer or living in the same area³.

If you meet the criteria, you can join and start saving and borrowing³. To become a member you visit or call the credit union to confirm what information it needs³. Tay Valley takes applications online or by printed form, and identification requirements apply when opening an account this way².

The credit union does not publish a list of family or household members who can join alongside an employee. Some credit unions extend membership to relatives living in the same household as a qualifying member⁴, but that is not stated for Tay Valley, so it is worth asking the office directly if you are not an employee of one of the three qualifying employers.

Loans for members and what they can be used for

You must be a member of a credit union to get a loan from it, and some credit unions ask you to build up savings first⁸. Tay Valley offers a range of loans from as little as £150 up to £5,000 for new members or members with a low savings balance⁹. Members with savings may apply for larger loans based on the amount of their savings⁹.

There is no automatic right to a credit union loan. Applications are considered by the Credit Committee, which takes into account income and expenditure, other borrowings, the reason for the loan, the repayment period and your previous history with the credit union¹⁰. Members do not need a minimum share balance to apply for a standard loan⁹.

Loans can be used for a variety of reasons, including car purchase, home improvements, household goods, holidays, or paying off more expensive credit from other lenders¹⁰. The majority of loans come with free loan protection insurance¹⁰. Where a credit union sells insurance it does not underwrite, the cover is provided by an insurer rather than the credit union itself.

For the wider picture on borrowing, see Loans: a complete guide.

How loan interest and charges work

Interest is calculated daily on your reducing balance¹⁰. That means the interest you are charged is worked out on what you still owe, not on the original amount, so it falls as you pay the loan down.

The rate advertised for your loan is the rate you get, no matter your individual circumstances¹⁰. There are no set up fees and no early repayment charges¹⁰. Repayments can be made through payroll deduction¹⁰.

Credit unions are subject to a legal cap on the interest they can charge. The Credit Unions (Maximum Interest Rate on Loans) Order 2013 increased the maximum interest a credit union may charge on a loan to 3 per cent per month¹¹. That is a ceiling set in law, not a rate any particular credit union charges, and it applies to credit union loans generally rather than to Tay Valley specifically. The credit union sets its own rates within that ceiling, so it is worth asking the office for the current rate on the loan you have in mind.

For comparison, payday lenders are capped at 0.8 per cent per day in interest on the original loan plus a late payment fee¹³. The two caps work in different ways and are not directly comparable, but both exist to limit how much a borrower can be charged.

Savers loans: borrowing against your savings

A savers loan, also called a secured loan, is secured against your savings¹⁴. Members with a share balance of at least £1,000 may apply for a loan of up to five times their share balance, with a maximum loan amount of £15,000⁶.

Because the loan is secured, all your current and future shares deposited with the credit union, up to the value of the outstanding loan, are held as security towards payment of the principal sum, interest and expenses¹⁵. In practice this means your savings stand behind the loan.

You continue to save while you repay, and savings continue to earn a dividend while you are repaying a secured loan¹⁴. Members are required to save a minimum of £10 per month while repaying a loan, and this amount is included in the repayment⁶.

Credit unions generally let members borrow at least two or three times the amount held in savings, depending on the credit union's loan policy¹⁶. Tay Valley's savers loan sits above that typical range at up to five times savings, for members who meet the £1,000 share balance threshold.

Saving with Tay Valley Credit Union and how dividends are paid

Saving is the other half of what a credit union does. All credit unions offer savings accounts and loans³. You can apply online or print an application form, and you can save through payroll deduction, which the credit union describes as easy and convenient². Once your account is open you receive a welcome letter with your account details, information on how to use the account, and regulatory information². You can then register for the Members Area to check balances and submit withdrawal and loan requests 24 hours a day².

Credit unions do not pay interest in the way a bank does. Instead, a credit union normally pays out a dividend once a year, and the amount you get depends on how much you have saved and how much profit the credit union has made¹⁶. Profit is shared evenly among savings accounts as a dividend, with some reinvested to improve services⁴. Dividends are usually paid annually⁴, and a successful year could see members receive a dividend as high as 3 per cent³.

Tay Valley does not publish a dividend payment date. Other credit unions pay at different points: some pay each spring, with the rate agreed retrospectively at the annual general meeting¹⁴, some aim to pay in December¹⁷, and some pay in March¹⁸. The rate is not fixed in advance, which is why the timing and the amount vary between credit unions and between years.

For more on savings accounts generally, see Savings accounts: a complete guide.

Withdrawal rules and when fees apply

You may not make a share withdrawal while you have a loan balance in excess of your share balance¹⁹. This is a common credit union rule: Baillieston Credit Union allows withdrawals at any time provided you do not have an outstanding loan balance greater than your savings²⁰, and Cardiff and Vale Credit Union does not allow withdrawals while a member has a loan²¹. Faughanvale Credit Union pledges a portion of savings when a loan exceeds the savings balance, and any balance above the loan amount may be withdrawn from time to time²².

Members must continue to save while repaying a loan⁹. Savings continue to earn a dividend while repaying a secured loan¹⁴.

On fees, a one-off joining fee is deducted from your first payment². The credit union's membership terms describe six free withdrawals in a twelve month period running from 1 October to 30 September, so the fee applies once you go beyond that allowance¹⁹.

Joining, paying in and leaving

To join, visit the How to Join page¹. You can submit your application online or print the application form if you prefer². Identification requirements apply when opening an account this way, and the credit union lists the forms of identification it can accept². A one-off joining fee is deducted from your first payment².

Once you have your account details, you can register for the Members Area to manage your account online, check balances and submit withdrawal and loan requests 24 hours a day². Saving through payroll deduction is available and the credit union describes it as easy and convenient².

A member may leave the credit union at any time without penalty, providing no debts are outstanding¹⁹. The account can be closed at any time on the same condition²³. If you leave your employer but still have savings or a loan with the credit union, the position depends on your circumstances, so it is worth contacting the office. Other credit unions take a similar approach: HEY Credit Union tells members that even if they leave their present employer they can remain a member but may need to pay funds in by an alternative method such as a bank standing order²⁴.

For the general process of opening, switching or closing an account, see How to open, switch or close your bank account²⁵.

Changing your mind: cancelling a loan or membership

Members have the right to cancel their membership without penalty within fourteen days of their membership application being processed²³. To cancel membership, contact the credit union office²³.

Members also have the right to cancel a loan agreement without penalty within 14 days of the loan being processed and funds paid out²³. To cancel a loan agreement within this period, contact the credit union office²³. The same 14 day right applies to secured loans, running from the date the loan funds are received, and cancellation is made by contacting the office within the 14 day period¹⁵. Written confirmation of cancellation must be received within five working days of the initial cancellation request²³.

If you cancel, the loan plus interest must be repaid in full²³. Interest runs from the day the loan is issued until the date of cancellation²³. The loan plus accrued interest must be repaid in full, with interest running from the day the loan is issued until the date the loan is repaid⁶.

Cancellation rights of this kind are standard for services arranged at a distance. Citizens Advice notes that some services fall outside these rights, including vehicle rental services²⁶.

Missed repayments and what the credit union can do

If you fail to make all repayments due under the agreement, the total amount outstanding will immediately become repayable and will be repaid in full, plus any accrued interest, from your credit union savings account¹⁹. The credit union may terminate the loan agreement and demand immediate repayment of all sums due if you fail to keep any part of the agreement, have given false or inaccurate information, or become incapable in law of managing your own affairs¹⁹.

This is the practical consequence of the savings and loan link. Independent guidance confirms that if you miss payments on a loan, the credit union may be able to use your savings to repay the loan¹⁶. For credit debts such as credit cards, overdrafts and personal loans, a creditor can usually ask you to pay back the whole amount owed if you do not catch up²⁹.

Missed payments also affect your credit record. Adverse credit is caused by missed payments, County Court Judgments and defaults³⁰, and missed payments will have a negative impact on your credit score and your ability to borrow in the future³¹. If you keep missing payments on a car loan, the lender may issue a default notice and then take further action to collect the debt and recover the car, possibly using a debt collection agency or applying for a county court judgment³².

How your savings are protected

Loans and savings with credit unions are protected by the Financial Services Compensation Scheme³³. Credit union savings are protected in the same way as savings with banks and building societies, and credit unions are also fully insured against fraud³⁴. Thistle Credit Union states that member savings are protected under the FSCS³¹.

Tay Valley Credit Union Limited is authorised by the Financial Conduct Authority, with firm reference number 213821, and has been authorised since 2 July 2002⁷. It appears on the Bank of England's list of credit unions incorporated in the UK³⁵. Its permissions include accepting deposits⁷. The credit union holds a Category F Consumer Credit Licence¹⁵.

Personal details are used for managing your accounts with the credit union, and are shared with other agencies only for credit referencing and debt recovery¹⁵. The credit union reserves the right to carry out a credit check when considering a loan request, and details of that check are recorded on your credit reference file⁶. Credit unions generally use manual checks to decide whether to lend, and you usually will not have to pass a credit check, even if you apply for an overdraft³⁶. They consider credit applications from people with poor credit ratings³⁷.

For more on how credit unions work and what they offer, see Credit unions: a complete guide. For the wider framework of consumer protections, see Consumer protection in UK financial services.