Consumer Credit Unions

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Consumer credit unions work on the ideology that people are worth more than money. Most of the financial services like loans, savings accounts etc. offered by banks are also provided by credit unions but at much better and affordable rates. Unlike banks, which are responsible for generating profits for their shareholders, credit unions exist only to serve their members. As a result, consumers looking for credit always prefer credit unions instead of banks and other financial institutions.

After the credit standards have been established and the credit worthiness of the consumers has been assessed, the management of a credit union must determine the terms and conditions on which credit will be made available. The stipulation under which credit is given is referred to as credit terms.

Credit terms have three components:

Credit period, in terms of the duration of time for which trade credit is extended- during this period the overdue amount must be paid by the consumer.

 Cash discount, if any, which the consumer can take advantage of, that is, the overdue amount will be reduced by this amount.

 Cash discount period, which refers to the duration during which the discount can be availed of. These terms are usually written in abbreviations, for instance '2/10 net 30'.

The three numerals are explained below.

"2" signifies the rate of cash discount (2 per cent), which will be available to the consumers if they pay the overdue within the stipulated time.

"10" represents the time duration (10 days) within which a consumer must pay to be entitled to the discount.

"30" means the debt payment must be made within 30 days.

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