Consumers should be aware that any rights to free banking are lost during the overdrawn period so this should be considered an additional cost of credit. Customers who exceed agreed limits or overdraw their accounts without permission will incur penalty charges. Overdrafts are contractually negotiated legal instruments. Typically reviewed annually, most banks require your account to be in credit for at least 30 days each year. Credit Unions Credit unions usually provide cheaper credit than any other source.
Members pool their savings in a central fund, which is used to provide loans to members.
Typically the maximum loan available is determined by the amount of member savings in the fund. Certain credit unions are set up to cater for workers in a large organisation or particular profession. The services offered to members are gradually increasing. Members are entitled to borrow at reasonable interest rates and to interest on their savings. Credit unions offer a free automatic loan insurance scheme that pays off the loan principal if the borrower dies.