The benefits of joining a payroll deduction scheme with a credit union

Managing finances should not be a headache. By joining a payroll deduction scheme with a credit union, a portion of money can be deducted from your salary (after tax) and used for savings or loan repayment.

Credit unions are ethical and responsible institutions that promote financial well being and inclusion for their members. Many have ‘Save as You Borrow’ (SAYB) schemes. This means if you take out a loan with a credit union, through payroll deduction, you can pay off your loan, and a proportion of the loan repayments will be placed into a savings account. This means you are saving whilst repaying a loan, ensuring a safety net of savings. Members are unable to access these savings until their loan is repaid.

Why you should opt in to a payroll deduction scheme

You are in control

You choose the amount you want deducted from your salary and you always have access to this money. Your financial situation is confidential, your employer only sees the amount that is deducted each month. 

Build your savings or repay your loans faster

Payroll deduction helps build financial resilience by creating a safety net of savings. In addition you do not have to stretch your disposable income to keep up with any loan repayments. Recent UK saving statistics found that 34% of adults have either no savings or less than £1000 in a savings account. It can be difficult knowing where to start, but being consistent is one of the most important things when it comes to good money management and saving. 

Saving as you borrow

Credit union’s ‘Save as You Borrow’ schemes enable you to borrow money with the added security that a proportion of repayments are placed into savings. This takes away the ‘thinking’ behind saving; no more standing orders, direct debits. You are left with complete peace of mind and the knowledge that you are consistently building a financial safety net.

Reduced stress

When you save or repay through salary deduction, you do not have to worry about forgetting or overspending. It is all automated, ensuring you are always on track. This not only makes life easier but also helps keep costs down.

Part of a member-focused institution

By becoming a member of a credit union through a payroll deduction scheme, you also have access to other credit union services such as affordable loans and other savings products. Your savings are also protected by the Financial Services Compensation Scheme (FSCS) scheme up to £85,000.

Seamless transition between employers

If you change employers, you can still maintain your payroll deduction scheme with your credit union (providing you still meet their common bond criteria). If your new employer does not offer payroll deduction, you can recommend the scheme or still save and repay via other methods such as branch visits, direct debit, or standing orders. Experiencing the mindset of saving an amount consistently, managing direct debits or standing orders should be easier. 

Check with your employer to see if they offer a payroll deduction scheme.  If they don’t, you can recommend this valuable and beneficial scheme to your employer.

Boost your chances of getting an affordable loan

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