05
December
2013
|
00:00
Europe/London

Have an affordable Christmas with Leeds City Credit Union


People across Leeds are being reminded that high-cost ‘payday’ lenders are not the place to go for extra money this Christmas – alternative lenders are available, offering a more affordable, ethical option.



As part of the ‘Take a Stand’ campaign against high-cost lenders Leeds City Council is supporting the Leeds City Credit Union with an awareness raising campaign across the city, to help people access the extra funds they may need, but without taking out high-interest loans they cannot afford.



Councillor Keith Wakefield, leader of Leeds City Council said:

“Christmas can be a very stressful time of year for many people, especially those who are already struggling financially or worried about getting into debt. It is also a time when so-called payday lenders increase their advertising tactics, often targeting those who can least afford it.



“Marketing of well-known brands has convinced many people to think of payday loans as normal, and an easy way out of their problems. However, loans of this type can lead to debts spiralling out of control.



“This is why it is so important that everyone knows that the Leeds City Credit Union is a realistic alternative – offering low-cost, easy-access loans but without the extortionate interest rates.”



This Christmas Leeds City Council is joining forces with the Leeds City Credit Union to launch an advertising campaign – which can be seen on buses, bus shelters, leaflets and heard on the radio - to make sure the people of Leeds know that if they are looking for a low cost loan, they should try the credit union first.



Cllr Wakefield added;

“Hopefully this campaign will start a shift in public thinking, so that credit unions become the go-to place for accessible loans rather than high-cost lenders.



“Because the credit union works closely with the council, with their client’s agreement, they can also refer people to us for extra support when needed – a great partnership, which benefits some of the most hard-pressed residents and families in our city.”



Over recent years there has been a boom in payday and other high cost lenders, leaving many of Leeds’ most vulnerable residents with debts which are spiralling out of control. Some lenders charge interest rates of more than 5000%, whereas a typical APR from the credit union is 26.8%.



High street banks will often only lend to people with a good credit rating and looking to borrow a minimum of £1000, whereas the Leeds City Credit Union is accessible to people with a wide range of financial circumstances and loans can be paid off at a timescale that suits the individual.



Facts about Leeds City Credit Union (LCCU):

• LCCU offers affordable loans and straight forward savings accounts.

• LCCU is a mutual – owned by its members. There are no shareholders and no annual bonus payments to directors. The focus is on the member to provide ways to help manage money better.

• Loans are given at a typical rate of 26.8% as opposed to pay day loans e.g. Wonga which carries an APR of 5853%

• Members’ deposits are protected up to £85,000 by the Financial Services Compensation scheme.



Case studies:

Miss X was recommended to contact the credit union by the council’s Moortown housing office as she was finding it hard to pay rent and council tax. At her appointment the credit union identified that she was already in debt to a high interest lender, this being the reason why she was finding it hard to pay her rent. It was clear Miss X needed referring to the council’s Independent Living Team as she disclosed she was suicidal because of health and financial issues. The credit union discovered she was being targeted by the high interest lender, being victimised and was taking unnecessary loans that were not needed. She had recently taken a £500 loan of which £280 was taken to pay off the existing loan, this left her with £220. The total amount of loan to be paid back was £900. The credit union contacted the high interest lender on Miss X’s behalf to get a full and final settlement figure. The credit union recognised that Miss X didn’t have a washing machine or a cooker and was washing her clothes in the bath and living on microwave meals. The credit union consolidated a loan and included funds for the appliances needed. These were ordered and delivered through our Co-op white goods scheme and were fitted enabling her to use them immediately.

Miss X now banks with Leeds Credit Union her rent plus arrears and council tax are now paid through a budget account and she is now saving for Christmas.



Mr Y was recommended to approach Leeds Credit Union by Seacroft North housing office; he was in rent, council, and water arrears, (as he was having difficulty paying rent, council tax and meeting expensive fuel bills). Mr Y was understandably very reserved and reluctant in discussing these difficulties when he first met with the credit union. After further explanation he wasn’t convinced about the service that was offered to him, so was advised to go away and think about it and to make contact once he had made a decision. However, Mr Y then made a second appointment with the credit union after deciding that it could help him manage his money.. A budget plan was calculated for Mr Y to pay his rent, council tax and water arrears through this account; his payments were calculated weekly coinciding with when he received his wage. Mr Y made regularly payments, with his council tax arrears decreasing, after several weeks of paying in to the credit union his council tax arrears are now clear along with his water arrears. With the surplus funds now available from paying council tax and water, the credit union increased the amount to pay his rent arrears to clear the rent account sooner. The other additional £20 per week left now goes in to a credit union savings account. Mr Y is now also accessing other Leeds Credit Union products.



ENDS

For media enquiries, please contact:

Emma Whittell, Leeds City Council press office, on (0113) 2474713

Email: emma.whittell@leeds.gov.uk