Pressure is building to ban payday lending following a damning report and criticism by MPs. Meanwhile Sheffield Credit Union tells Action Desk how it is a genuine alternative for those who need rapid cash
Rogue payday lenders are preying on vulnerable people who are plunged into debt, says Citizens’ Advice.
It is calling on the Office of Fair Trading to ban irresponsible payday lenders. But with 72,000 firms in the market and criticism of the OFT for being ineffective, the multi-million pound problem of unmanageable debt is set to get worse before it gets better.
But there is a genuine alternative, according to Jackie Hallewell, general manager of Sheffield Credit Union.
Recent changes mean new members can get their hands on a loan in as little as 48 hours, although it can take up to 10 working days.
And the interest rates charged by the not-for-profit organisation are 26.7 per cent compared to up to 4,000 per cent. And they are typically paid off over 46 weeks while payday lenders require a loan to be paid off within a month.
Seven payday loans is the record. But Sheffield Credit Union has also been approached by several people with five and many more with between one and four.
Jackie Hallewell said the situation was “horrific” and called on payday lending companies to be banned.
She added: “We did a secret shopper survey and found some companies were not doing proper checks. And the amounts they were taking weren’t agreed and were too high, leaving people with nothing to pay other bills - resulting in more debt through bank charges.
“We see so many people who say, ‘I wish we had known about the credit union sooner’.”
In the last year, the organisation has saved people taking loans £825,000 compared to a leading doorstep lender, which charges 278 per cent.
She added: “We are making it easier to join and borrow money. Sheffield Credit Union is a genuine alternative to payday lenders.”
Sheffield Credit Union, on Commercial Street, is a savings and loan co-operative. Call 0114 2760787.