The Financial Services Compensation Scheme is stepping in to protect some 610 members of the Rotton Park and Winson Green Credit Union in Edgbaston.
The scheme declared the organisation formally in default on March 3 after investigating its solvency and has processed the first customer claims. It expects these to reach £300,000.
Jonathan Clark, director of claims at the FSCS, said: "We have stepped in to help members of this credit union and are doing everything possible to ensure they get compensation for lost savings fast.
"We have a very good record of processing deposit claims quickly, which the recent collapse of the Streetcred Credit Union in Rochdale highlighted. We process more than 94 per cent of claims in a month or less."
Janet Healey, a Rotton Park and Winson Green customer, said: "I was worried my money would be gone but thankfully the FSCS has been able to give it back. I am sure there will be a lot of other grateful customers who would have lost savings if it had not been for the compensation scheme."
