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.
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.
Miss Smith (not her real name) 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 Smith 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 Smith’s behalf to get a full and final settlement figure. The credit union recognised that Miss Smith 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 Smth 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.