Credit unions ‘promote savings culture’

Credit unions serve to promote a savings culture and take care not to allow people to borrow more from them than they can afford, an industry body has claimed.

According to Abcul, the main trade association for UK credit unions, borrowers are always assessed to make sure they do not have access to loans that they would be unable to afford.

At the same time, credit unions often provided people with small loans that they would be unable to obtain from a bank, thus allowing them to avoid doorstep lenders, a spokesman said.

“By taking a loan from a credit union, these borrowers have the knowledge that they are dealing with a locally owned financial co-operative, rather than a door step lender,” he explained.

He added: “Credit unions promote a saving culture and because they are often community based they have offices and branches in localities not served by many banks.”

According to a Family Resources survey undertaken last year, 90 per cent of households use a current account for their savings.

© Adfero Ltd

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