Credit unions aim to double membership

More than 30 credit unions have signed up to a “landmark” expansion drive which will save consumers up to £1bn in loan interest repayments in the coming years.

The Government has previously agreed to invest £35.6m to transform the sector and help it to double its membership by attracting around one million new members over the next five years to add to the one million who already exist.

It wants to see people on low incomes, who often pay a “poverty premium” for loans because they have limited options, becoming less reliant on expensive credit providers such as payday lenders.

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Estimates have found that the plans will save borrowers up to £1bn in loan interest repayments by March 2019, compared with the amounts they would have been charged if they had gone to a high-cost lender instead.

The initiative is being managed by the Association of British Credit Unions (Abcul), which confirmed yesterday that a first wave of 31 credit unions have joined the scheme, with more expected to follow. The expansion project will allow credit unions to broaden out their appeal by pooling their resources to offer more “fast and efficient” services and give people more consistency.

The project will enable more members to access products such as current accounts and cash Isas using the internet and mobile phones. Credit unions will pass on the benefits that the economies of scale give them to their members, through lower loan rates and better savings returns, Abcul said.

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