Difficulty: Challenger (Level 2)
Nowadays, most people save their money in banks. Sometimes, banks even give you a little extra money for keeping your savings there.
However, banks weren’t always so accessible, especially to lower-income people. So some people in Hong Kong would save and borrow money through something called a credit union.
What is a credit union?
A credit union is a place where people help each other with money. Members save money together and can also borrow money when they need it.
Credit unions began in Germany in the 1850s to help poor people.
In the 1960s, Father John Collins, an Irish Jesuit priest, asked the Asia Foundation for money to help start and grow credit unions in Hong Kong.
Thanks to him, Hong Kong created its first credit union in 1964. It was called the St Francis Credit Union.
According to the Credit Union League of Hong Kong, there are currently 43 credit unions in Hong Kong.
To join a credit union, you need to have something in common with the other members. For example, you might work at the same place, go to the same church or live in the same neighbourhood.
The goal of the union is not to make money. But it shares any extra money it earns with the members. The goal is always to promote saving and to provide smaller, low-interest loans. They do not offer services such as credit cards or large home loans.
Wah Fu Credit Union
Back in the 1970s, many families moved into a new housing area in Hong Kong called Wah Fu Estate.
Many of them did not have enough money to buy important items like refrigerators or sewing machines.
The Wah Fu Estate Credit Union was created to help residents get the items they needed. If someone needed money, they could borrow it from the union. Like banks, members who borrow money also need to pay back extra money, called interest, because credit unions usually use the loan interest they receive to pay for expenses.
As a person repays the loan, the interest rate becomes smaller. For example, a member may borrow HK$1,000 and repay it in 10 instalments. The first few payments may include an extra HK$100 in interest. But by the final repayment period, they may only need to pay HK$10 in interest.
“By helping others, you are also helping yourself,” said the current head of Wah Fu Credit Union, Kwok Yau-ming.
Today, most people use banks, so fewer people join credit unions. But the Wah Fu Credit Union is still running.
For example, one university student recently borrowed money to pay for school. He was allowed to repay it after graduating.
“This community is ‘everyone for me, I for everyone,’” Kwok said.
