Taking on the payday lenders: Council's cash boost for credit union
Published by Max Salsbury for 24dash.com in Local Government and also in Communities, Finance
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Haringey Council is to loan £250,000 to a borough credit union, in a move designed to drive people away from payday lenders.
The money adds to the £500,000 in loans the London Capital Credit Union has received since 2012.
The council approved the latest loan after the credit union smashed its targets – with more than 2,100 members in Haringey and another 100 signing up every month.
With Haringey the fastest-growing contingent of the credit union in London, the money will help it expand its work even further amid the spread of payday loan firms across the capital.
It has issued more than 1,100 new loans worth nearly £1 million to Haringey residents since October 2012 and the borough’s members hold nearly £900,000 in savings with the union.
And last month, the council unveiled plans to give every secondary school starter a £20 savings account with the credit union to encourage children to start saving.
Councillor Joe Goldberg, cabinet member for finance, said: "We’re determined to do all we can support Haringey families facing the perfect storm of the soaring cost of living and a proliferation of legal loan sharks on our high streets.
"I’m proud that our loans have already allowed the credit union to expand its vital work in Haringey, with more members taking out loans and savings accounts here than anywhere else in London.
"Today’s new funding will ensure that membership will continue to grow and protect more of our residents from unscrupulous payday lenders who target the most vulnerable and defenceless in our society."
Martin Groombridge, manager of London Capital Credit Union, added: "This latest support from Haringey Council shows a clear commitment to supporting the work of the Credit Union in providing alternatives to high cost borrowing.
"It allows us to offer many more loans to Haringey residents helping thousands of people each year to escape from payday lenders."
Last year, the council banned the top 50 payday loan firms from its IT network in an effort to protect its residents from the excessive interest rates they offer – with some charging up to 4,000% APR.
The credit union offers low-cost 'saver loans' with a fixed interest rate of 12.7% APR, with a portion of each monthly repayment put into a savings account so account holders start to save while clearing their debt.