Government · UK · Bank of England
UK Credit Union Arrears Jump 22% as Lending Stalls
UK credit union arrears rose 22.1% to £234.8 million in 2025 while the loan book grew just 3.5%, the slowest growth in the five-year series. The value end of the UK consumer credit market is tightening, and that matters for anyone selling to budget-conscious households.
Source published Summarised
Key findings at a glance
- £234.8m total net liabilities of UK credit union loans in arrears at the 2025 financial year end
- 22.1% increase in the value of loans in arrears over the year
- 38.2% increase in arrears owed on loans more than 12 months overdue
- 8.8% share of the credit union loan book now in arrears, the highest in the five-year series
- 49,341 loans more than 12 months in arrears, up from 43,240 in 2024
- 3.5% growth in loans to members in 2025
- 10.3% growth in loans to members the previous year, for comparison
- £2.67bn total value of loans outstanding to credit union members
- 2.29m UK credit union members at the 2025 financial year end
- 0.8% membership growth in 2025, the slowest in the five-year series
- 335 credit unions filing an annual return, down from 392 in 2021
- 63.1% rise in Scottish credit union arrears, the steepest of the four UK nations
What the report covers
The Bank of England published its Credit Union Annual Statistics for 2025 on 31 July 2026. The release aggregates the annual regulatory returns filed by every authorised credit union in the United Kingdom, so it is a census of the sector rather than a sample survey. This edition covers 335 credit unions, a combined membership of 2.29 million and £4.99 billion in total assets.
Credit unions are member-owned savings and loan co-operatives that serve people mainstream lenders often price out or decline outright. Because of that, the sector's loan book works as an early-warning indicator for household financial stress further down the income distribution, in a way headline consumer credit figures rarely capture.
Three data sets sit inside the release: basic membership information, a full balance sheet and income statement, and a loans table splitting arrears into two buckets, three to 12 months overdue and more than 12 months overdue. That last split carries the most useful signal this year. The release is the natural companion to the Bank's monthly Money and Credit statistics, which track the mainstream lending market covered in our report on UK mortgage borrowing in June 2026. Figures are published for the UK and separately for England, Scotland, Wales and Northern Ireland, on a five-year series running from 2021 to 2025.
What this means for UK marketers
The number to take seriously is not the 22.1% headline. It is the 38.2% jump in arrears more than 12 months overdue, because that bucket is where temporary difficulty has already hardened into debt the borrower is unlikely to clear. Long-term arrears grew more than ten times faster than the loan book itself. For UK marketers selling to value-led households, that is a direct read on discretionary spending capacity through the second half of 2026.
Two practical consequences follow. First, affordability messaging beats aspiration messaging in this segment right now. Members' savings balances grew just 1.7% and the loan book 3.5%, so the buffer is thin and appetite for new credit has visibly cooled. Campaigns built on upgrade, premium tier or bundle-up mechanics will underperform campaigns built on total cost, payment clarity and demonstrable value. Our report on price and conversion found 74% of shoppers will switch brands for a lower price, and nothing here suggests that share is about to fall.
Second, be careful with instalment credit as a conversion lever. Buy now pay later is now mainstream in the UK, as our report on BNPL adoption set out, and it is tempting to lean on it when basket values stall. The arrears trend is a reminder that a checkout conversion funded by credit the customer cannot service becomes a refund, a chargeback or a churned customer three months later. Measure the downstream cohort, not just the checkout rate.
The regional split matters too. Scottish credit union arrears rose 63.1% while Northern Ireland's fell 8.3%. If you run regionally weighted budgets or geo-targeted campaigns for retail, home or financial services clients, that is a genuine difference in consumer resilience across the UK, and it argues against a single national offer and creative strategy. Where affordability pressure is sharpest, the win usually comes from removing cost objections and friction at the checkout rather than from buying more traffic, which makes it a conversion rate optimisation problem before it is a media-spend problem.
How they got the data
The Bank of England compiles these statistics from the annual returns authorised credit unions are required to file, so the figures are administrative data rather than survey responses. Coverage for 2025 is 335 returns, down from 357 in 2024 and 392 in 2021, which reflects continued consolidation in the sector rather than a change in reporting requirements. Most credit unions have a financial year end of 30 September but not all do, so the year-end figures are not perfectly synchronised across institutions. The Bank flags this in its explanatory notes.
Arrears are reported as net liabilities, defined as the loan balance plus interest owing minus the member's attached share balance. That definition matters when comparing these figures with arrears data published elsewhere: it nets off the borrower's own savings held at the credit union, making it a more conservative measure than gross arrears. Figures are not seasonally adjusted. For wider UK household financial context, the ONS maintains its own personal and household finances statistics.
Government · UK
Read the full report
From Bank of England · published 31/07/2026