30th January 2015
If you’re sick of the big four banks that dominate the high street it may be time to join the other 1.5 million people who have signed up to a credit union.
The most recent quarterly figures from the Bank of England on credit unions show they are slowly gaining a following as the stigma of credit unions as a last resort for the poor is being shaken off.
In the third quarter of 2014 the number of adults using a credit union had risen to 1,564,063, up from 1,460,381 in Q3 2013.
Credit unions are no longer for those who are struggling to qualify for a bank account at a traditional lender they are run as community co-operative that benefit local people by taking in savings and making loans, although these loans are typically small.
With large banks having lost consumer trust, the idea of a co-operative financial company is starting to appeal to all as an alternative to the ‘Big Four’; Barclays, Lloyds, HSBC and Royal Bank of Scotland.
The Competition and Markets Authority launched an investigation into these banks last November over fears that lack of transparency and switching in the current account market is detrimental to consumers.
David Mann, head of money at uSwitch, said: ‘As credit unions gather significant momentum, it’s clear consumers are looking for an alternative to the vice-like grip the Big Four banks have on market.
‘Over 1.5 million consumers have now turned to credit unions for their banking and lending needs. Yet there is a misconception that they only offer a solution to those with a rocky credit history. In fact, credit unions can help people across all income spectrums and meet the growing need for short-term credit neglected by the high street banks.
‘For example, they tend to offer payday loans at a lower rate than the maximum set by the Financial Conduct Authority and much lower than the astronomical rates of the less scrupulous lenders.’