Customer-owned credit unions seek to help members with better interest rates and personalised service, explains Laurel Stowell.
Credit unions are New Zealand's best kept secret, the CEO of their national association says, and they are doing well in a crowded financial market.
A credit union offers all the services of a bank, but its customers are its owners. Credit unions are co-operatives - like Rabobank, Fonterra and Foodstuffs.
A quick look at the website interest.co.nz recently gave some interesting comparisons. It showed a deposit of $10,000 for two years would earn 4.5 to 4.75 per cent interest in a bank and 4.25 to 8.1 per cent interest from a credit union.
Borrowing a sum for three years would mean paying interest of around 6.9 per cent to a bank or a credit union.
Some credit unions appear to be stunningly successful. New Zealand's Aotearoa Credit Union is growing at 15 per cent a year - the fastest in the world.
It is offering up to 8.1 per cent interest on deposits, loans from 9 per cent interest and up to 5 per cent interest on money in savings accounts.
New Zealand has 27 credit unions with 95 branches, New Zealand Association of Credit Unions chief executive Henry Lynch says. The association is based in Auckland, has 32 staff and oversees the affairs of its 21 members.
Mr Lynch says the idea started centuries ago in Europe, and the New Zealand association was in its 50th year.
The overarching ethos was helping people.
"It's basically good, old-fashioned savings, loaned out to people at a beneficial interest rate, because it's the owners or members that are borrowing the money."
Credit unions can be set up for the workers of a particular employer. New Zealand examples are Credit Union Bay Health, Caxton Employees Credit Union and Fisher & Paykel Credit Union.
Or they can be set up by workers' unions, with the United Credit Union a New Zealand example. Community credit unions - such as Aotearoa Credit Union and Credit Union South - are for anyone to join.
Members can vote on a paid or voluntary board of directors, or stand for the board. Each member has one vote, regardless of the size of their financial stake.
Members tend to be staunchly loyal to their credit union and rate their satisfaction highly.
In New Zealand, these alternative financial institutions grew at an average of 1 to 2 per cent in the past financial quarter, though few of them put much effort into marketing.
Instead, they put any profit back into benefits to members - such as lower fees and better interest rates.
Loan policies tend to be conservative, Mr Lynch says, though exceptions can be made.
Loans are to people rather than organisations and are confined to New Zealand. Interest rates varied from 6.9 to 16 per cent.
"The majority of our lending is all to people buying a car, a mortgage, house renovations, debt consolidation - everything the Kiwi battler needs to get through on a daily basis."
Anyone walking into a community credit union will find the same range of services they would find in a bank.
The credit unions also put some effort into educating their members about using money. Some offer money coaching, budget advice and Christmas accounts.
CREDIT UNIONS IN NEW ZEALAND
* 27 in total, with 180,000 customers
* 95 branches
* Sixth-largest number of financial transactions a year
* Governed by Friendly Societies and Credit Unions Act 1982
AOTEAROA CREDIT UNION
* Fastest growing in the world
* 11 branches
* Anyone can join
* Interest on loans from 9 per cent
* Interest paid on term deposits up to 8.1 per cent
* Interest paid on savings up to 5 per cent