Credit unions & community banking

These are only offered by a few credit unions, such as Glasgow, Scotwest & Capital Credit Unions (all in Scotland) and No 1 Copperpot Credit Union (for police staff). Mortgage rates are fairly competitive currently with those offered from traditional high street lenders, with a 2 year fix at about 5% on average.

However, never pick a mortgage without looking at the whole market. See Cheap mortgage finding for how to locate the best deal.

Some credit unions offer current accounts. If your union provides a bank account facility, it'll operate like a basic bank account. Most credit unions will charge you for the account – this is to cover costs, as they are not-for-profit entities.

The charge can be as little as £1.50 a week or up to around £5. The charge also means you don't pay fees for paying late or making an error. Otherwise, credit union bank accounts generally operate like any other bank account. You can have your salary paid in, set up direct debits and standing orders from the accounts, take money out at cash machines, and some will issue debit cards so you can use them in shops.

However, you won't get an overdraft or a chequebook, or the seven-day switching guarantee that high street banks offer. This is a voluntary standard and credit unions aren't signed up to it. You can still switch your bank account to a credit union – it's just likely to take up to a month to complete the switch.

Some credit unions offer car loans, as an alternative to car finance. This is a standard, fixed term loan, offered by credit unions such as Co-Op, Leeds and Pennine Community. This will be a better option for some consumers than car finance, but as always, it's best to look at all the options available to you before making a decision.