What's in it for me? Why dividends can beat interest

It's a question I'm often asked when I talk about the Credit Union. People want to know "What's in it for me?" or "What interest will I get on my money?" or "Why should I save with the credit union instead of a bank or an ISA"

I could talk for an hour about  the ethical return on your money, about the value of supporting your friends and colleagues through a member owned not-for-profit organisation which works solely for the service of BAE Systems people and the warm fuzzy feeling you might get,  but for now, let's talk cold hard cash.

Over the past 15 years, savers in the UK have lived through a tough era for returns. After 2010, interest rates stayed near zero for more than a decade, inflation quietly eroded savings, and even “best buy” accounts rarely beat the cost of living.

The long slump in savings returns

From 2010 until the Bank of England began raising rates in late 2021, the average easy-access savings account paid under 1% interest. Cash ISAs offered only slightly more — around 1–1.5% for most of that period. Meanwhile, inflation averaged around 2–3%, meaning most savers were losing real value every year.

Your credit union did better.
Even in the low-rate years, First Rate Credit Union’s annual dividends averaged around 3–4%, comfortably ahead of the banks and building societies. And when interest rates finally rose in 2023, your dividend jumped to 4.3%, then 4.5% in 2024 — keeping pace with the best returns on the market.

The reason is simple: credit unions don’t have outside shareholders. The surplus goes straight back to members in the form of dividends. When the business performs well, members share the benefit directly.

Isn't my money better off in an ISA?

Many people assume that an ISA is always the best place to save because of the tax advantage. But for most savers, that’s not actually true anymore.

Since 2016, UK savers have had a Personal Savings Allowance (PSA). This means that Basic-rate taxpayers can earn £1,000 of interest or credit union dividend each year tax-free, and Higher-rate taxpayers can earn £500 tax-free

So if you’re a basic-rate taxpayer, you’d need to have well over £30,000 in savings (earning around 3%) before you even begin to use up your allowance:

For most working people — especially those saving for shorter-term goals — the credit union dividend has beaten both the banks’ easy-access rates and the return on an ISA.

Real returns tell the story

When you adjust for inflation, the picture is even clearer.
Between 2010 and 2022, most bank and ISA savers saw negative real returns — their money lost buying power. First Rate’s dividends narrowed that gap and for most of the period actually outpaced inflation, meaning members’ savings grew in real terms.

Bottom line

For most savers, the credit union offers the best of both worlds — competitive returns, no tax to pay on ordinary balances, and profits that stay within the membership rather than going to shareholders.

Start building value with your credit union

If you’re keeping money in a bank account that barely covers inflation, it’s time to move it somewhere that works harder for you.
With First Rate, your savings earn a fair return, stay accessible, and help your colleagues too.

Join or top up your savings today — and make your money part of something better.

Sources:
Moneyfacts Group plc, UK Savings Trends (2010–2025)
Bank of England, Effective Interest Rates – Household Sight Deposits (series IUMWTFA)
ONS, CPIH All-Items Inflation Rates (2010–2025)
HMRC, Personal Savings Allowance (Finance Act 2016)
First Rate Credit Union audited accounts and AGM reports (2010–2024)