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Young Saver Account teaches kids the importance of saving

by | Jul 21, 2022 | news |

Young Saver Account teaches kids the importance of saving

It’s never been more important to have some savings put by, and our Young Saver Account not only allows children to save from a young age but helps to teach them the value of saving for the future.

Our Credit Union Young Saver Account is the perfect way to help your kids or grandkids learn to save and, by regularly putting away some money, they can build up a pot of savings to spend on something they need, or to keep for the future.

You can open a Young Saver Account for a child under the age of 18, and you can save for them in many ways, including having your Child Benefit paid directly into the account.

Credit Union Director Elisabetta Bertero said: “Encouraging kids to save from an early age is really useful in helping them to understand how to manage their money.

“By opening a Credit Union Young Saver Account for your children, you can give them the chance to put away a little bit each week or month. Before long, they will have some savings to spend on the things they want, or to build up a nest egg for their future.

“As well as giving young people the chance to learn about the value of saving, a Young Saver Account can also help them with things like numeracy skills and understanding the importance of record keeping.”

If you have children, grandchildren, or young relatives and you would like to encourage them to save, then you can open a Young Saver Account on their behalf. An adult must act as a trustee for the account and is responsible until the young saver reaches the age of 18. The adult trustee is the only person able to authorise withdrawals from the account.

To open a Young Saver Account with us, you (the trustee) first need to join the Credit Union as a member.

Membership is open to anyone who lives, works, studies or worships in any of the following areas:

  • Barnet
  • Brent
  • Camden
  • City of London
  • Enfield
  • Hackney
  • Haringey
  • Islington
  • Waltham Forest

You can also join us if you are a member or employee of The Co-operative Group (The Co-op) in London and the South East Region, a member of UNITE or UNISON or if you are an employee anywhere in the UK of one the organisations listed on our website.

To open your child’s account simply fill in the form on our Young Saver Account page.

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How We Decide to Whether to Offer a Loan – The Basics

The Credit Union’s primary objective is to help members avoid or escape from debt by promoting a culture of saving. When we offer loans, we only do so if the borrower agrees to save a little while they repay. The establishment of a savings habit is proven to reduce the harms and risks of long-term borrowing becoming problem debt. Basically, when we get a loan application our decision is based on the following two principles:

1. Do we trust the applicant to repay the loan?

2. Can the applicant afford the loan repayment

This guide is designed to help members understand our thinking so you can best prepare if you should need to apply or re-apply for a loan.

1. Key Points in Our Assessing Trust of the Applicant

a) Has the applicant started saving? The money we lend is members savings so, especially at busy times, we have to give priority to loan applications from members who have made at least one savings payment. That first payment is good evidence that you are a real person and helps us confirm identity.

b) Proper Proof of ID & Address? What forms of proof of identity and address has the member provided? If you are able to connect your bank account through ‘open banking as art of the loan application process it a good way of proving ID. First time loans may be required to use online Open Banking.

c) Previous Borrowing History. Has the applicant borrowed and repaid us previously? Previous good repayment record supports any application.

d) Did the applicant inform us of other money owed? Failure to list all debts in the application process is likely to result in the loan application not being approved. It suggests that the applicant is either not in control of their money or not being completely honest with us and in either case we cannot put our members savings at risk by lending. Credit Reference Agency checks are used to show us what money is owed and to whom.

e) Is the member sensible with money? When we review the bank transactions of the loan applicant, we often see patterns of expenditure that suggest the applicant is not taking a sensible approach to expenditure. Changes in the way they manage their finances would suggest that the loan would not really be necessary. We want to help people be in control their finances and do not want to lend members savings to people who are not deemed sensible with the way they spend. This may be things like gambling, excessive shopping and/or eating out/takeaway food deliveries.

f) Always be ‘up front’ in your application. Honesty pays. We do not judge.

2. Key Points in Our Assessing Affordability for the Applicant

a) Is this loan in the member’s best interest? The value of the loan application in comparison with your income is a key measure of affordability. The loan interest members pay on loans pays our staff salaries, but we are not out to profit from you, rather we want members to borrow less over time and take control of their finances.

b) Positive Bank Balance at Month End? Is there money left in the members bank account at the end of the month that would be sufficient to cover the loan repayment if approved? If not, the member must explain how the loan would become affordable, for instance, by reducing expenditure in other areas.

c) Is the applicant struggling with existing debts? When we review the bank transactions of the applicant we can see income and expenditure. If the loan applicant tells us how the loan will clear other debts and reduce their expenditure this will help us understand affordability.

d) Is the purpose of the loan considered sensible? If the applicant is not paying essential bills such as mortgage or rent then a loan for a car or holiday is likely to be unwise and unaffordable.

e) Has the applicant fully explained why they need to borrow? Always feel free to email or call us explaining the circumstances that mean you need to borrow. The reasons for needing to borrow are complex, but being honest and explaining the circumstances can often help the ordinary humans on the Loans Team at the Credit Union to be able to assess trust and affordability. You briefly explaining your thinking about affordability gives us confidence that you are thinking sensibly about money, and sometimes allows us to suggest alternatives that may well be in your best interest.

f) Is the loan to clear other more expensive debts? Credit Reference Agency checks are used to show us what money is owed and to whom. If your loan application is to pay off other debts, stop and list every one of those debtors.Work out the cost of each. Consider clearing one or two at a time if its your first Credit Union loan. Pick them off one or two at a time, the most expensive first.

g) Has the applicant stopped to think about affordability? The ‘Your Money’ section of our website provides access to a budget planner which, if used and shared, gives us good evidence of affordability. Particularly helpful for loan applicants in financial stress. We hope this gives you an idea of how we decide yes or no to loan applications. The decision is by one or more other credit union members on our Loans Panel. We hope this helps you understand our thinking so you can best prepare if you should need to apply or re-apply for a loan.