New figures have shown that credit unions, long touted as offering a vital alternative to payday lenders, are on the rise.

Despite support from many quarters, credit unions have remained relatively low-key in the UK. However, official figures from the Bank of England released on Friday reveal that the UK’s credit union membership has passed the 2 million mark for the first time.



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Campaigners will be hoping this is a tipping point for the movement, which has won the endorsement of everyone from the Duchess of Cornwall, who signed up to the London Mutual Credit Union on an official visit to its office, to the former Dragons’ Den star Theo Paphitis, who revealed last year that he and his companies had invested a six-figure sum in a credit union called retailCURe for retail workers.

Credit unions are not-for-profit cooperatives owned and controlled by their members that have traditionally specialised in loans and savings for the less well-off. In a credit union, members typically pay in small sums to their account and can then access loans. When retailCURe launched last year, members had access to loans worth up to £5,000 at interest rates ranging from 9.9% APR to 26.8% APR.

After years spent trying to shake off the perception that they are well-meaning but old-fashioned and only for “poor people”, credit unions are increasingly targeting people of all incomes and many have branched out into current accounts, mortgages and other products.



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One of the movement’s most vocal supporters has been the archbishop of Canterbury, Justin Welby: in 2013 he told Wonga’s then boss Errol Damelin that the Church of England wanted to “compete” it out of existence as part of its plans to expand credit unions.



The Bank of England figures show that during the first three months of this year, the number of people served by the UK’s credit unions passed 2 million. This included 830,000 adults and children in England, and 410,000 in Scotland. Meanwhile, their total assets have continued to increase and are almost 2% higher than the last quarter at more than £3.2bn for the UK as a whole, said the Bank. In addition, the proportion of loans in arrears has fallen.

