CREDIT UNIONS

Auckland Star, Volume LXXIV, Issue 230, 28 September 1943, Page 2

CREDIT UNIONS

LOW INTEREST MONEY

MOVE BY FRIENDLY SOCIETY

A new financial system,- modelled to benefit working people, whereby cash advances may be made with or without security, shares can be taken up on the principle of weekly contributions from savings, under which loans advanced can be paid off at an interest rate of not over 1 per cent per month, and under which interestbearing deposits can be made has been introduced into New Zealand, and may in the future play an important part in the life of the community. The system is described as the credit union, and one union has already been registered by the Manchester Unity Oddfellows, and is in operation in New Zealand. The movement has been officially launched by the Auckland District of the Order through its 79 lodges, and is already receiving substantial support; while other friendly societies are actively considering the introduction of the scheme. Briefly stated, credit union is a mutual society with a twofold purpose: the promotion of thrift among members and making it possible for members to borrow readily and easily at reasonable rates of interest. It is an independent organisation, entirely voluntary, and confined strictly to members of the Order, their wives and children. Credit union has been in vogue in America for many years and has a membership approaching 3,000.000, with assets estimated at £100,000,000.

Use Of Small Savings As applied to the friendly society movement it is a co-operative organisation for the accumulation of small savings for provident and productive purposes on easy terms. It will promote thrift amongst members and create a source of credit at legitimate rates by means of loans, such as for sickness, accident, family conditions or death. Loans can also be made for house painting, furniture, repairs, decoration, clothing, holidays, hospital bills and the like. As membership is selective, and as funds will be handled by credit committees who have persoytf.l acquaintance with members of the credit union and intimate knowledge of their circumstances and character, advances can be made with a degree of elasticity not possible in the dealings of ordinary money-lending institutions. The member's character will be considered as good security, and his genuine concern for the good name of his lodge will ensure honouring his obligations. Members may take up £1 shares to any amount up to 200, which are paid by easy weekly contributions. From the pool thus established loans are advanced, and, after operating expenses have been met and a stipulated amount placed to reserve, dividends are paid on the shares up to as much as G per cent, though most credit unions prefer to pay less and to set up a surplus against lean years and to effect, where possible, a lowering of the rate of interest on loans.

Pay Dividends Credit unions, it is stated, are able to pay dividends by making loans to members at one per cent per month on the monthly balances. A loan of £10 would be paid off in ten months at the rate of £1 off the principle with interest on a sliding scale from 2/ the first month, creasing according to the decrease in the principal, the total cost of the loan being 11/. With credit unions established ultimately on a district or individual lodge basis, they will have the effect of directing current earnings and savings of a substantial section of the community into capital investment which should have an added influence in national economic stability.