Credit Unions and Low-income Communities

Abstract

Since the late 1980s the number of community-based credit unions in Britain has grown steadily. These are financial co-operatives based on low-income neighbourhoods, owned and controlled by local residents, which aim to provide savings and low-cost credit facilities to their members. Although located in economically disadvantaged communities, credit unions are not exclusively used by the poor. While better-off groups save and borrow more, a greater proportion of low-income users would not have purchased goods and services in the absence of a credit union. Credit unions are making useful but marginal contributions to the credit and debt problems of low-income families. They could probably achieve more with additional resources, but any intervention by external agencies should be sensitive and avoid damaging the strong mutual aid foundations upon which credit unions are based.