Credit unions are member-owned, non-profit financial cooperatives that provide a wide range of financial services, including everyday banking, and savings accounts, loans, credit cards, and investment products. According to the latest statistics from the Association of British Credit Unions Limited (Abcul), there were 246 credit unions in the UK. This number has been steadily increasing over the past few years, as more and more people are choosing to bank with credit unions instead of traditional banks.

The history of credit unions can be traced back to 1844 and the Rochdale Pioneer Society, a group of weavers in Rochdale, England, who established a cooperative society to provide food and other necessities to their members at fair prices. This concept of cooperation and mutual aid laid the foundation for the development of credit unions.

By 1852, Franz Hermann Schulze-Delitzsch, a German lawyer and economist, established the first working credit union model in Eilenburg, Germany. Schulze-Delitzsch designed the credit unions to provide financial assistance to small businesses and artisans who were unable to obtain loans from traditional banks.

The credit union movement spread rapidly throughout Europe in the late 19th century and early 20th century. By 1900, there were over 20,000 credit unions operating in Europe.

The credit union movement was introduced to North America in the early 20th century. The first credit union in the United States was established in 1908 in Manchester, New Hampshire. The movement grew rapidly in the United States and Canada during the Great Depression, as people sought alternative sources of credit and financial services.

Today, there are over 89,000 credit unions operating in 117 countries, serving over 260 million people worldwide. Credit unions have become a significant force in the financial services industry, providing a wide range of financial services to their members.

Here in the UK credit unions gain traction as the concept of mutual banking gained popularity among working-class communities. Inspired by similar initiatives in the United States and Europe, individuals began forming small cooperative societies to pool their savings and provide loans to each other. These early credit unions were often established within specific workplaces or neighbourhoods, offering a sense of financial security and support to their members.

 As early as the 1920s: The League of Credit Unions was formed to promote the development and growth of credit unions across the UK and by the late 1970s, the UK government recognized the growing importance of credit unions and introduced the Credit Unions Act of 1979. This legislation provided a legal framework for credit unions to operate and offered them access to government funding. As a result, credit unions experienced a period of rapid growth, expanding their reach into more communities and providing financial services to a wider range of people.

Today, credit unions continue to innovate and grow, adapting to changing financial needs and technological advancements and are an integral part of the UK financial landscape, serving over 1.4million members (including 100,000 junior depositors).  They continue to adhere to their core principles of member-ownership, non-profit status, and community focus, offering competitive rates, personalised service, and financial literacy education to their members having loans of over £1.4 billion and deposits of £2.5 billion they are a testament to the growing popularity of credit unions as a source of affordable and accessible finance. 

Personal loans are the most common type of loan issued by credit unions. They are typically used to consolidate debt, finance home improvements, or cover unexpected expenses. Business loans are also becoming increasingly popular, as credit unions offer competitive rates and flexible terms. Mortgages are a smaller part of the credit union lending market, but they are still an important product for many borrowers.

Credit unions are regulated financial institutions, and they are subject to the same prudential requirements as banks. This means that they are well-capitalised and they are able to manage their risk effectively. Credit unions are also protected by the Financial Services Compensation Scheme (FSCS), which means that deposits of up to £85,000 are protected in the event that a credit union fails.

How credit unions work:

As credit unions are owned and controlled by their members they have a say in how the credit union is run. There are many benefits to banking with a credit union; their appeal is that they are owned and controlled by their members, not by outside investors. This means that credit unions are committed to providing their members with the best possible rates and service, not maximising profits. They achieve his by offering:

• Lower fees: Credit unions typically charge lower fees than banks. This is because credit unions are not motivated by the need to maximise profits.

• Better rates: Credit unions typically offer better rates on loans and savings accounts than banks. This is because credit unions are not paying out dividends to outside investors.

• More personalised service: Credit unions typically offer more personalised service than banks. This is because credit unions are smaller and more focused on their members' needs.

• More community involvement: Credit unions are often involved in their local communities. This is because credit unions are owned and controlled by their members, who live and work in the community.

To join a credit union, you must meet certain eligibility requirements. These requirements vary from credit union to credit union, but they typically include:

• Living or working in the credit union's field of membership

• Belonging to a particular organisation or group

• Sharing a common bond with other members

Once you have met the eligibility requirements, you can join a credit union by opening an account. You will need to provide some personal information, such as your name, address, and date of birth. You may also need to make a deposit to open an account.

Credit unions are a great option for people who are looking for a more personalised and affordable banking experience. They offer a wide range of financial services at competitive rates. If you are interested in joining a credit union, you can find a list of credit unions in your area by visiting the website of the National Credit Union Administration.

The lower fees and better rates offered by credit unions can save members a significant amount of money over time. This can be especially beneficial for low-income individuals and families who are struggling to make ends meet.

Credit unions also offer a variety of financial education programs and resources. These programs can help members learn about budgeting, saving, investing, and managing their debt. This financial literacy education can help members make informed financial decisions and improve their financial well-being.

Credit unions have played an important role in providing financial services to people who have been underserved by traditional banks. They have also been a source of financial assistance and economic development in communities around the world. As the credit union movement continues to grow, it is likely to play an even more important role in the future of global finance.