Many people in the United Kingdom do not have a current account. For some, it might be an inability to produce the necessary documentation that banks require to open an account; while others may not be able to meet monthly minimum deposits. As a result, many banking customers are left with only a basic bank account from which to manage their financial affairs. However, a recent partnership between nine British credit unions and The Co-operative Bank aims to offer an alternative to high-street bank current accounts by launching a current account of their own.



Credit unions may not be as popular in the UK as they are 'across the pond', and previously were limited in the services they could offer to members. Credit unions are financial co-operatives that are owned and run by their members and give access to financial services. They operate by a 'common bond' which determines who can join, such as people who live or work in the same area or for the same employer, for example. Although the number of credit unions in the UK has fallen in recent years to 350, the number of customers has grown substantially. In September 2006, there were a total of 620,000 credit union customers - more than double the amount recorded in 2001. The current accounts will be run and promoted by individual credit unions, but the administration will be carried out by The Co-operative Bank.

Traditionally, credit unions were restricted to offering members services such as savings accounts, investments and short-term personal loans. Day-to-day banking, however, had to be conducted through a conventional high-street bank but the addition of current accounts now means that people without a bank account now have an alternative option to the basic bank account offered by banks and the Post Office. Although only a pilot scheme, it is anticipated that other credit unions will roll out their current accounts later in the year, with the credit union sector serious about winning business from the high street banks.

The credit union current account features include a Visa debit card with access to the Link ATM network, as well as standing order and direct debit facilities. However, the account doesn't feature a cheque book or overdraft so there is little likelihood of straying into the red; but unlike most standard current accounts, there is no interest payable on account balances that are in credit. Other services typically associated with credit unions will continue to be offered as normal and, like most typical high street banks, you can have your salary paid directly into your account. Charges incurred in administering the account are also much lower than those levied by high-street banks.

For those people who may not qualify for a conventional high-street banking current account, the availability of a credit union account may sound like a good idea. However, there are still some services available through high-street banks, such as 24-hour online and telephone banking that is not available through credit union current accounts. And with many credit unions only open for a few hours during the week, many people may find such restricted hours to be inconvenient when it comes to arranging a personal loan or other service.