FALLING interest rates have benefited bank and building society borrowers, but many people with a credit union loan are reaping the rewards of lower interest repayments.
Traditionally, the interest rate charged by the credit union has amounted to one per cent per month on the diminishing value of the loan, reducing the total amount of interest you pay as your term progresses.
According to a spokesperson for the League of Credit Unions, the umbrella organisation for the 529 credit unions in Ireland, repayments were kept at this rate throughout the 1980s and into the early 1990s, despite the highs and lows being experienced in the interest rate market, on the grounds that it would balance itself out over time. The steady decline in rates over the past couple of years, however, has inspired a major rethink and a minimum APR lending rate of 8 per cent has now been recommended by the League. A number of larger credit unions now charge their members this rate or slightly higher making them very competitive in the wider lending market.
:quality(70)/cloudfront-eu-central-1.images.arcpublishing.com/irishtimes/VR3765MFOBH2NMV2QNICYDF67M.png)