Loans from credit unions have become less attractive since interest rates have fallen. With competition in the market set to continue to be extremely aggressive, the movement is looking at ways to win back customers.

Unlike banks and building societies, credit unions do not charge different rates of interest for various types of loans and have operated a relatively simple rate of 1 per cent per month on the declining balance of the loan.

A trend is emerging where credit unions in certain areas are beginning to reduce interest rates as an incentive to encourage more people to borrow from them.