Council continues fight against payday lenders
Plymouth City Council is continuing its fight to stop people from signing up to high-interest, short-term loans by supporting the city’s credit union, which offers people more affordable alternatives.
Plymouth has just over 200,000 adults living in the city and it is estimated that at least 5,000 are using online payday lenders. Many of them are paying annual percentage interest rates (APR) well in excess of £1,000%.
In its fight against crippling interest rates, often targeting those who can least afford them, the Council continues to champion the city’s credit union which this week celebrated six months of trading in the new Frankfort Gate shop.
Since it opened in October 2013 there has been a steady-flow of people signing up to the credit union, with 211 new members now on board, bringing total membership to 1,654 but the Council insists many more people can benefit.
The City of Plymouth Credit Union offers affordable lending, savings and budget accounts for people living in Plymouth, as well as direct payments for landlords. Residents benefit by being part of a not-for-profit, member-owned financial organisation dedicated to the economic development of Plymouth’s community.
Paul Williams, Manager of City of Plymouth Credit Union says: “We provide all our members, including those who have been excluded from traditional offers, with financial services. All savings are covered by the Financial Services Compensation Scheme and all savings and loans come with free life insurance (Terms and Conditions apply). We are a very real and very credible alternative to high street banks and payday lenders.”
A typical high interest rate loan of 1,000% will mean that if someone borrows £100 over 4 weeks, they will repay at least £161 and in many cases it will be more than this. In some cases, the amount of interest will be more than the original amount actually borrowed. This is in comparison to only 1,654 people using credit union services in Plymouth paying 12.7% APR. This means if someone borrows £100 over 4 weeks, they repay just £100.64.
Councillor Chris Penberthy, Cabinet Member for Cooperatives and Community Development, said: “This work is so very important – it directly affects the household finances of some of the city’s most cash-strapped people. These are households that have to take short-term loans to survive week by week and month by month. So to help them break free from such vicious cycles of debt is absolutely the right thing to do.
“We teamed up with the Credit Union and Plymouth Community Homes to create a city centre shop so that we could help spread the word and make a real difference to people’s finances. With 110 new members already signed up, we know we are reaching people, but we want to do more. There will be people out there who are paying so much more to borrow than they need to – our message to them is go to the credit union shop, they can genuinely help you. They also enable people who may not have access to a bank account to save, knowing their money will be safe and secure with the Union.
“Locally we have a very strong Energy Cooperative and we’re working closely with our Credit Unions to find ways they can support our ambitions to make sure as many people as possible switch their electric and gas suppliers to cheaper and affordable alternatives. We are also looking at schemes that will assist both young people and vulnerable families to open a credit union account to assist them with both saving and affordable borrowing.”
For more information about the City of Plymouth Credit Union visit: www.cpcu.co.uk
