Council warns residents not to use payday loan companies this Christmas
Published by Max Salsbury for 24dash.com in Communities and also in Featured, Finance
Islington Council is warning its residents not to turn to payday loan companies to cover Christmas costs.
The council is taking action as record fuel prices and the Government's welfare reforms bite into the finances of those on low incomes.
The local authority has teamed up with Islington Advice Alliance, London Capital Credit Union and others to advise residents against taking out payday loans with interest rates of up to 4,000%, and instead to join a local credit union for low cost 'Saver Loans'.
The Office of Fair Trading began formal investigations of 50 payday loan companies last month, over concerns about poor practices in the sector.
Cllr Richard Greening, the council's executive member for finance, said: "Struggling with money is nothing to be ashamed about and with incomes rising slower than inflation, many are making difficult choices this festive season.
"But payday loans are a very expensive quick fix and should be avoided.
"Instead, residents can take up a low cost 'Saver Loan' from the Credit Union."
Martin Groombridge, London Capital Credit Union manager, said: "We are seeing more people across the borough with debt problems - particularly from using high interest lenders.
"Islington residents can plan ahead, start a credit union savings account, and avoid big overdrafts and credit card bills later on."
Islington resident Amina Habib, a member of the Archway-based London Capital Credit Union, said: "I was frightened of getting into debt, seeing others having made that mistake.
"Now I use the credit union's low cost 'Saver Loan'.
"It means I always know how much I have to pay and my debt is manageable."