Credit unions are proving increasingly useful for those suffering financial exclusion, providing basic financial services and encouraging them to save money, new research suggests.

In a survey by the Personal Finance Research Centre, over 1,400 members from 17 credit unions were questioned.

Of these, nearly a third (31 per cent) said that their credit union represented their only method of saving, while among low-income members – earning £200 a week or less – credit unions were even more important, with 46 per cent admitting that they had no other savings.

The research also showed that those using credit unions were less likely than the general population to have their own bank account, demonstrating their importance to these financially excluded individuals.

Among credit union members, only 83 per cent said they had bank accounts, compared with 93 per cent of the general population.

Commenting on the findings, Mark Lyonette, CEO of Association of British Credit Unions (ABCUL), who commissioned the research, said that credit unions were increasingly providing the financially excluded with crucial financial services.

"This report shows how credit unions are reaching a wide range of people in their communities," he said.

"It provides an invaluable baseline from which credit unions can measure their current and future work. It will help inform strategies for bringing credit union membership, and the affordable credit and savings opportunities that come with it, to many more people in years to come."