25th January 2012

BRIDPORT: Credit Union chairman's warning on payday loans

By Chris Denne

The Chairman of Bridport’s Credit Union has called on people to avoid ‘payday loans’ at all cost and to consider using their services instead.

Peter Brownlow said that companies such as Wonga.com and Moneysupermarket can potentially land economically vulnerable people with extremely high interest rates resulting in debts that are difficult to pay off.

The volunteer-run CU, however, can offer interest of just two per cent on a reducing loan, or one per cent if the applicant has had a savings account with them for at least four months.

And as anyone taking out a loan is effectively borrowing from other members who have savings with the CU, thorough checks are carried out to ensure the debt can be paid off.

The CU is regulated by the Financial Services Authority, and as such all deposits are protected by the government to the same level as regular high street banks.

But unlike any other bank it aims to cater for people who would otherwise not have access to a bank account or who might otherwise be drawn into unmanageable debt situations.

“A typical loan would be around £500 to cover such day-to-day things as a broken washing machine,” Mr Brownlow said, with money only being lent to applicants who have solid prospects of paying the debt off, resulting in responsible, manageable borrowing credit.

“We also run a Christmas Club which encourages people to put a little aside each month so that the cost of Christmas doesn’t come as such a shock.”

Advice and information on saving with the CU or applying for a loan can be found at the Citizen’s Advice Bureau on South Street on Wednesdays from 10am-noon, and at St Mary’s Church, South Street, on Saturdays 9:30am-11:30am.

BRIDPORT: Credit Union chairman's warning on payday loans

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