Membership of credit unions has risen to a record 1.9 million in the UK, as consumers suffer from the cost-of-living crisis.
An analysis from digital lending marketplace Freedom Finance also revealed that total loans lent to members hit an all-time high of £1.74bn at the end of last year, which surpasses the pre-pandemic peak of £1.7bn.
Freedom Finance said credit unions are often able to offer smaller, cheaper, shorter-term loans that can be difficult for borrowers to find elsewhere, with other specialist lenders able to charge very high interest rates.
In March, the Centre for Social Justice (CSJ) released a report that found 1.08 million people are victims of loan sharks, and called for reform to the Credit Union Act 1979, including the creation of a new credit union mergers fund.
Freedom Finance said it supports the call for reform and a broadening of the types of credit available as the cost-of-living crisis continues to worsen and following the withdrawal of many short-term credit providers.
“The rising membership and loan volumes with credit unions in the UK demonstrate that more and more people are looking for affordable credit products as cost pressures rise,” said Brian Brodie, chief executive of Freedom Finance and CSJ debt policy advisory board member.
“With many short-term credit providers withdrawing from the market, credit unions now fulfil a vital role in serving people left behind by mainstream lenders…
“Credit unions are only part of the solution. A strong choice of reputable providers of short-term loans and other credit will be essential to helping people through the current cost-crunch.
“A failure from the lending industry to provide this support will only drive more people towards insidious, illegal loan sharks.”