As the cost of living crisis continues to put immense pressure on household finances, there has never been more demand for affordable credit. It might be tempting for families to turn to high-cost credit in a bid to balance their budgets, or even illegal lenders known as loan sharks.
These methods may offer a perceived short-term relief, but they can have devastating consequences as people struggle to pay back the cash they have borrowed.
England Illegal Money Lending Team is a national trading standards body which investigates and prosecutes illegal money lenders. Recent figures released from the organisation show that nearly one in ten people turned to loan sharks to cover the costs of Christmas in 2021. In the first half of 2022, more than half of the victims did to pay for essentials such as utilities, food and fuel.
It may be scary if you’re struggling to make ends meet – particularly with the financial burden of Christmas – but there are safer options available to help. Credit unions are not for profit community lenders, providing affordable loans, and savings. Here is everything you need to know about credit unions and how they can provide financial relief at a lower cost. Information in this article has been sourced from Citizens Advice, Findyourcreditunion.co.uk and Credit Unions Wales.
What is a credit union?
A credit union is a financial co-operative which provides savings, loans and a range of services to its members. It is owned and controlled by the members and not by external shareholders or investors. Members pool their savings to provide each other with credit at a low interest rate. To be part of a credit union you have to share a common bond with other members. This can be working for a particular employer or in a particular industry, or simply living or working in a specified geographical area which could be as small as a village or as large as several local authority areas. According to Citizens Advice, this could include:
- living or working in the same area
- working for the same employer
- belonging to the same church, trade union or other association
if you live outside an area that a credit union serves there is a chance you can still join it. For example, if you’re a tenant in a housing association that’s linked to the credit union or you’re an employee of a national company whose local workplace is linked to the credit union. You can usually join if one member of your family is already a member of a credit union, other relatives living at the same address can usually join too.