Payday loan companies beware: Islington Credit Union has declared a new ‘war on debt,’ and those offering short term loans with high interest rates have been named enemy combatants.
As Brits struggle to make ends met amidst low wages and rising energy and rent costs, debt levels are soaring ever higher. The Citizens Advice Bureau in Islington says that, since its April 2011 opening, has been approached by more than 11,000 people – many due to debt struggles – and CAB case workers say that its clients owe a cumulative £40 million in payday advance, store card, housing, and credit card debts.
In response, the Islington Credit Union has started to urge local residents to apply for much more reasonably priced loans through them in stead of turning to high street payday lenders that can charge interest rates as high as 1,700 per cent. The credit union’s manager, Martin Groombridge, says it can handle cash loans as little as £30 to as high as thousands of pounds, all for much less interest than you would encounter from a credit card or a high street banking provider.
A £1,000 loan will see a borrower paying around £66 in interest over the course of the year, Mr Groombridge said. Additionally, the manager said that the credit union requires members to save £5 on a weekly basis if they wish to take out a loan, leading to not only cleared debt by the end of the year but around £260 in seed money for a savings pot.