Credit Union loans hit record high

New figures out this week from the Bank of England show that loans made to members of the UK’s 388 member-owned, not for profit credit unions stood at a record high of £1.92 billion in the third quarter of 2022. This was £51 million higher than the previous quarter and up £255 million compared with the same period in 2021.

The recent rise in the cost of borrowing combined with the withdrawal of short-term credit providers from the market has left many people short of choice when looking for affordable credit products.

Robert Kelly, CEO of the Association of British Credit Unions (ABCUL) said “It is encouraging to see that our sector continues to gather pace as more people from all walks of life trust credit unions as a place to save, as well as a great option for loans and a range of financial services. Credit unions will continue to serve communities and employers in these testing times through the provision of ethical and responsible products and services.”

Credit unions help a wide range of customers to save and borrow and are an alternative to both high-street banks and higher-cost or illegal lenders. They are experts in lending responsibly and sustainably to people, including those in financially vulnerable circumstances, and are a vital sector that is helping people manage unexpected expenses and smooth irregular income. Bank of England data showed that there were 1.94 million adult members of credit unions in the third quarter of last year.

ABCUL stated in November last year that UK credit unions plan to grow their membership by 5 to 10% per year over the coming years to help more people access savings and a fair, regulated alternative to the shrinking commercial high cost credit market and illegal lenders. In England, Scotland and Wales, there’s a cap on the amount of interest that credit unions can charge on their loans of 3% a month or 42.6% a year APR – many offer rates far below this.