Can credit unions help in the credit crunch?
Thursday, October 02, 2008
Speaking at this week's Financial Inclusion Conference, Labour Co-operative Welsh Assembly Member Huw Lewis called for innovative thinking to plug the credit gap and solve family finance issues. He particularly called for credit unions to form part of the answer:
The credit union network is still in its infancy in Wales, but the 34 branches up and running already provide a financial lifeline to people who would otherwise be locked out of traditional finance arrangements. Although credit unions already provide advice, in addition to low cost loans, there is much more they could be doing to ease the burden on lower income families.Huw went on to highlight his Facebook campaign against payday loans:
In the United States, where the credit union movement is better established, student loans are now being offered to plug the gap being left by traditional lenders. Whilst here in the UK we see many potential students being turned off higher education because of a fall in the number of grants and loans now available, no new alternatives have been offered. If we want to build our knowledge economy we need to look for creative finance packages that allow students to go on into post-graduate education.
Credit Unions make the scandal of high-interest loans avoidable. I have recently started a campaign through Facebook – and I hope you can show your support by signing up today - against the really worrying, ugly phenomenon of payday loans.A debate has been kicked off over at LabourHome on this very subject...
What happened when I started speaking out against 1000% interest rates, and crazy penalty payments? I got bombarded with spam emails, and abuse from these companies trading on people’s misery. Does that strike you as the behaviour of a reputable business operation?
Credit unions are a safe and reliable way of saving and lending money, and we must do all we can to support their work.
Labels: credit unions, Huw Lewis, students
4 Comments:
The charges on Payday loans are less expensive than bouncing a check or paying late fees. It's also a great option for someone who doesn't want to get caught up with credit cards debts. They can also help in a tight situation, its quick, and most places are open longer hours than banks.
commented by 
Breezie, 9:32 PM
Breezie, 9:32 PM
Funny that the payday loan community go to such lengths to promote themselves on the internet, my Facebook profile is always littered with offensive adverts promising better times but little notice of the three- or four-figure %age interest. While desperate people may turn to these sharks at desperate times, it doesn't make them in consumers' or society's interest. Anyone charging 1000% interest is evil and money-grabbing in my book. Far better to promote credit unions, which not only give access to small loans at affordable rates, but also promote responsible saving to avoid people getting into the same problems in the future.
Funny that breezie has such strong feelings on the UK Credit Union movement, one can surmise from his spelling of cheque and the site he links to that he is based in the United States!
Anyway, lots of things are cheaper than bouncing a cheque or paying bank fees. That doesn't mean that pay day loans or door step credit is a good thing.
The largest provider of door step credit in the UK, Provident Financial Services plc charge between 183% & 365%. That cannot be said to be a fair rate of interest. It's nothing short of usury.
Not only would a credit union charge much less they would, as responsible lenders, ensure that anything borrowed was affordable to the borrower and encourage thrift and saving.
With the financial sector in turmoil the approach of credit unions is surely one which should be emulated. Credit Unions see saving and thrift to be equally important as the availability of credit.
Their whole ethos is co-operative, run wholly for the benefit of those who use the service. Credit unions are non-profit and mutually owned. Members play a key role in the management of the CU through directorships or volunteering.
I welcome recent legislative changes to ensure that credit unions can continue to grow and become sustainable mutual businesses and enabling them to offer a wider range of products and services, whilst keeping their co-operative values at the heart of everything they do.
Anyway, lots of things are cheaper than bouncing a cheque or paying bank fees. That doesn't mean that pay day loans or door step credit is a good thing.
The largest provider of door step credit in the UK, Provident Financial Services plc charge between 183% & 365%. That cannot be said to be a fair rate of interest. It's nothing short of usury.
Not only would a credit union charge much less they would, as responsible lenders, ensure that anything borrowed was affordable to the borrower and encourage thrift and saving.
With the financial sector in turmoil the approach of credit unions is surely one which should be emulated. Credit Unions see saving and thrift to be equally important as the availability of credit.
Their whole ethos is co-operative, run wholly for the benefit of those who use the service. Credit unions are non-profit and mutually owned. Members play a key role in the management of the CU through directorships or volunteering.
I welcome recent legislative changes to ensure that credit unions can continue to grow and become sustainable mutual businesses and enabling them to offer a wider range of products and services, whilst keeping their co-operative values at the heart of everything they do.
If you bothered to read his remarks, you would see he is saying credit Unions are better then loan sharks. If you have a problem reading like he has a problem spelling the government has courses.
Yes walk in to the co-op shop and spend ten minutes in it then go to Tesco and see which is cheaper.
Yes walk in to the co-op shop and spend ten minutes in it then go to Tesco and see which is cheaper.
