FOLLOWING on from winter’s Army&You article on the cost of serving for F&C families, AFF F&C Specialist Katherine Houlston put your questions about the benefits of saving with a credit union to Valerie Walwyn (pictured above), chief executive of Plane Saver Credit Union and military veteran. Here’s what she had to say…
What is a credit union?
It’s a financial institution that’s owned and controlled by its members, i.e. everyone who saves or borrows rather than shareholders. Members pool their savings and provide loans and other financial services to each other at reasonable interest rates.
The Armed Forces has its own dedicated credit union called Joining Forces (Plane Saver, Forces Finance and Serve & Protect), which provides loans and savings accounts for you and your soldier.
Why should F&C families save money?
We usually advise people to have a goal in order to motivate themselves to save money. For F&C families it’s more than a goal – it’s your ability to remain in the UK. Having money saved up to pay for visas is essential for your future. No one else will pay and without a valid visa you’re at risk of being removed from the UK.
How much do I need to save?
Once you enter the UK, you are given a five-year, limited leave visa. At the end of those five years, you should be eligible to apply for Indefinite Leave to Remain (ILR). If your family consists of you and two children, then the full cost of ILR at today’s fees is just over £7,000. However, you then have to take into consideration the cost of remaining here once your soldier has discharged.
It’s wise to make sure there’s enough money for your soldier’s ILR application regardless of their expected run-out date, just in case they are unexpectedly medically discharged. In total, a family of four should aim to save £9,500 for visas.
What’s the easiest way to save?
The easiest way to save is to pay into a savings account every month. Joining Forces can obtain your monthly savings straight from your soldier’s pay or you can set up a standing order or regular online payment from your bank account into your savings account. A family of four would need to save £160 every month to have saved up £9,500 by the end of five years.
If I haven’t saved this much, will the credit union give me a loan?
Credit unions use many of the same principles as other lenders to determine who they will lend money to. This is dependent on your previous behaviour with money, your income and expenditure and whether you can afford to repay the money that you’d like to borrow. Credit unions are likely to consider favourably any attempt that you’ve already made to save for your visa.
How much will I have to pay back?
Because credit unions are not-for-profit, the annual percentage rate (APR) – which is the cost of borrowing – is much lower than banks or payday loan lenders. Typical APR for a credit union is around 12 per cent, whereas for a payday loan it can be up to 1,500 per cent! This makes a massive difference to the amount you must repay even for a small loan.