The Credit Union Difference
Credit unions have been at the heart of many communities for decades, writes Sara Burch, but never have they played such as vital role as during the Covid-19 pandemic.
See this page in: Cymraeg
Given that the average household owes over £50k, you might think that the availability of credit was not an issue in the UK. Think back to 2008, though, and you will recall how a global economic shock was magnified on the high street by the actions of lenders. More recently, the misery caused by payday lenders was a national scandal, and of course money spent on bank interest is largely lost to the local economy. So where is the mutual alternative that puts people first?
For over 20 years community credit unions have been growing steadily in every part of Wales. They raise funds from saving members and lend it to members who want to borrow, keeping money local and helping members to stay on top of their finances. Like their older cousins the mutual building societies, Welsh Credit Unions are there on the high street, and rooted in their communities, but also have the competitive digital offering and commercial edge young members expect.
Credit Unions in Wales have responded to the coronavirus pandemic by moving online and to phone services, accelerating a shift that was already taking place, and ensuring that members always have access to their money. They thrive by knowing their members, and have checked in with vulnerable regulars by phone, video chat and email. The ‘credit union difference’ is to turn borrowers into savers; credit unions have been applying nudge theory since before it was invented, through savings direct from pay, or child benefit loans with savings built in. During the pandemic we have seen how having savings, even savings earmarked for Christmas or holidays, can help a family through a crisis. Credit Union savings and small loans have bought extra shopping, equipped children for learning, and bridged the gap until payday for furloughed staff.
Many of us now realise that recovery after the pandemic will rely on people spending locally, and a restructuring of the household debt bubble. We have the chance to build something fairer, more human, and more sustainable. If banks turn off the lending tap and hike their rates, credit unions will become an even more important part of the foundation economy in Wales, and have the potential and ambition to step up. Credit unions already finance the recycled furniture for the family moving into a home, the van for the trader delivering it, and hold the savings of the housing officer handing over the keys.
Keep an eye out for the Credit Unions of Wales Strategy, shortly to be released, which sets out a partnership approach to growth for the sector. Employer partnerships with a credit union are easy to set up, and a great way to help staff. So if you are a co-operator looking to Build Back Better but not yet a credit union member, it’s time to wonder why.
This blog is published as part of a series for Co-operatives Fortnight 2020. Let’s build something better together. #KeepCooperating
“Credit unions will become an even more important part of the foundation economy in Wales, and have the potential and ambition to step up.”
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