Driving Sustainable Growth: How Credit Unions Can Unlock the Power of Personal Loans

• Apr 23, 2025
• By Matt Potere

Credit unions have long been pillars of financial stability, deeply embedded in the local economies they serve. Their ability to build trusted, long-term relationships has been a key differentiator in an increasingly competitive landscape. Yet, as the financial services industry evolves along with consumer needs and expectations, credit unions must adopt new strategies to grow their portfolios and better serve their members – especially in today’s high-interest-rate and high-inflation environment, where household debt is at record levels. 

One opportunity stands out: strategic personal lending for the digital era. By leveraging personal loans as a tool for responsible debt consolidation and financial empowerment, credit unions can acquire new members and create a more diversified, high-yield asset base. 

In the face of this staggering debt and persistent high costs at the checkout counter, consumer sentiment has hit a two-year low. And as inflation expectations surge at the fastest pace in nearly 25 years, consumer uncertainty persists and confidence has plunged to a four-year low. 

Against this backdrop, credit unions have a distinct opportunity to step in and help members not just get by but actively manage their finances, rebuild their confidence and increase their financial stability. 

With APRs currently 7.5% lower than credit cards on average, personal loans present an attractive way for consumers to pay down debt more quickly and affordably. In fact, if adopted broadly, this strategy could have a notable impact on financial wellness, saving U.S. households over $80 billion annually. For credit unions, this also presents a crucial opportunity to offer members a responsible, attainable path toward freedom from high-interest debt. 

While credit unions have traditionally focused on mortgage and small business lending, personal loans offer distinct advantages. A well-structured personal loan program can reduce overreliance on real estate and commercial loans, introducing a new revenue stream with attractive risk-adjusted returns. Additionally, offering personal loans strengthens relationships with existing members while attracting new borrowers seeking better alternatives to high-interest credit card debt. 

By leveraging digital lending platforms, credit unions can quickly scale personal loan offerings with data-driven underwriting, quicker decisioning and the seamless digital experiences members are looking for today – ensuring efficiency while keeping a sharp focus on risk management. Such a compelling, digital-first offering enables credit unions to connect with younger members and expand beyond traditional geographical boundaries by benefiting from their partner’s scale with relatively turnkey implementation. 

By embracing digital innovation and leveraging strategic partnerships, credit unions can expand their impact, compete more effectively and drive smart, sustainable growth. Those that do so now will be better positioned to carve out a strong competitive advantage for the long-term. 

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