In a programme about the wider credit crunch, debt and the human costs of debt, the Money Programme on BBC2 has highlighted the work of credit unions in the UK. With credit becoming harder to come by and people struggling to make ends meet, people hitherto not associated with door step lending are turning to companies like Provident, Greenwood and Shopacheque for money to pay bills and cover other expenses.
The trouble is that these companies charge a small fortune for loans. APRs of over 200% are not uncommon and these simply lead to a spiral of indebtedness. The UK unlike many other countries around the world has no anti-usuary laws meaning that there is no legal maximum charge on loans.
Credit Unions on the other hand are mutual financial institutions that are owned and operated by their members. Deposits are pooled and then loaned to other members at an affordable rate of interest. This is usually 12.68% APR on a reducing balance, the legal maximum is 25% APR for credit unions. Even this higher rate is a fraction of what personal credit companies charge.
I believe that home credit providers are taking advantage of the most vulnerable in society. Their door to door collection services are presented as a ‘friendly face’ and often attract those who are housebound, on benefit or otherwise unable to access mainstream services. However this becomes a very expensive friendly service with a massive sting in the tail.
There are credit unions all over the UK, you may be able to join one based on the industry you work in, or the community in which you live. For a list of credit unions in your area and more information take a look at The Association of British Credit Unions website.
Filed under: General | Tagged: ABCUL, BBC, BBC2, credit unions, Greenwood, Money Programme, Provident, Shopacheck, Usuary
