Sheffield is standing up to payday lenders and loan sharks with the creation of a financial organisation.
Finance for Sheffield aims to help stop people being ripped off, by offering an alternative to the high-cost credit market.
The scheme was announced with support from national money-saving expert and TV commentator Martin Lewis.
Martin, founder of website MoneySavingExpert.com, said: “Sheffield needs to be applauded for a venture to try to take on payday lenders. Sadly these firms are killing high streets across the country and causing misery to many.
“What we need are innovative schemes to offer the public cost-effective alternatives – while not easy to do, it’s crucial we try.”
Finance for Sheffield will launch in the autumn with a branch, helpline, smartphone app and email and mail contacts. It will be open to all Sheffield residents – not just those struggling financially.
It will comprise a Credit Union, Community Development Finance Institution, a white goods provider and advice service.
The announcement comes after an investigation into the issues of high- cost credit in Sheffield by MP David Blunkett and the Sheffield Executive Board last year.
It found 50,000 residents use products like payday loans and doorstep lending, racking up an average debt of £800.
Council leader Julie Dore said: “For too long, payday and doorstep lenders have been able to exploit some of the most vulnerable people in our city, preying on their need for available credit and ripping off people with extortionate rates of interest.
“We believe Sheffield needs a fairer option and are working to create a new, ethical, affordable credit option.”
The Very Rev Peter Bradley, Dean of Sheffield Cathedral and scheme supporter, said: “It’s humiliating and overwhelming to live in need of high-cost credit. Our vision is a city where people have support to find their way out of poverty.”