The benefits of a workplace loan with a credit union
A workplace loan scheme allows staff to borrow from a credit union through their employer’s benefits package, which is repaid via salary deductions from their pay packet.
Workplace loans can be a useful tool to help employees develop savings habits because once the loan is repaid, staff get used to a nominal sum being taken from their wage and place it into a savings account instead.
It is important to remember that credit unions offer very competitive rates of interest on personal loans. Interest is charged on the reducing balance of the loan which is important if you want to repay your loan weekly rather than monthly, because you’ll pay less interest overall.
Credit unions also include free life insurance at no extra cost – so if you die before repaying the loan, the balance would be paid off for you.
Employers have a corporate responsibility to support the financial wellbeing of their workforce which in turn benefits their own business.
According to the FCA one in ten employees said they found it hard to concentrate or make decisions at work because of money worries and 19per cent have lost sleep worrying about money, all of which impact productivity.
As the average household debt in the UK continues to rise, with 23 per cent of people either revolving a credit card or using high-cost short-term credit, the need to be more financial responsible is greater than ever. Workplace loans take into consideration an employee’s length of service rather than the usual high street bank method of credit ratings.
The fact that repayments are made via salary deduction on a fixed date provides peace of mind to staff and helps them to plan ahead. This could be particularly useful for employees who struggle with day-to-day budgeting. It also encourages staff to improve savings habits and educates them on the importance of ensuring strong financial foothold and not spiral into a lifetime of debt.