Sheffield: need help making ends meet this Christmas?

A pioneering new scheme launched in South Yorkshire aims to transform credit provision – and make unaffordable payday loans a thing of the past.

“Christmas is an expensive time of year. If you’re thinking about taking out a loan, there are lots of affordable options to choose from,” says Heather Williams-Taplin, head of major projects at cross party thinktank Demos, which is working with Sheffield City Region mayor Dan Jarvis MBE and local stakeholders from the public, private and voluntary sectors on the initiative.

“Taking out a pay-day loan, using a company who come to your door or loan shark, might seem like an easy option if you need cash quickly. But costs can quickly add up, and it’s possible to get into unaffordable debt that you really struggle to pay off.

“Interest rates can be extremely high, so you’ll also end up paying much more in the long run. The same thing can happen if you’re thinking about borrowing from someone you know; they might not be so friendly when you can’t get the cash together in time.”

The new website, goodcreditindex.co.uk lists 29 local services which offer information, advice and affordable credit near you – including five which can provide affordable loans.

Among them is the Sheffield Credit Union, a not-for-profit organisation that offers savings and loans across South Yorkshire. Established in 2004 by bringing together a number of smaller credit unions, it has grown to provide its members with safe savings products and low cost, affordable loans.

According to Demos, good credit should be fair, affordable and transparent. The lender will be clear about what you’re signing up to and won’t charge you unaffordable interest rates.

Credit unions only allow members to borrow what they can afford, and they may be able to lend you money even if you have a poor credit rating.

Kevin, 65, has been a member of the Sheffield Credit Union since 2015 and uses it for regular short-term loans as well as for saving.

As he is severely disabled, "asking the bank to help was a waste of time: if it hadn't been for the credit union, I would have ended up on the streets," he says. "They have been smashing, the staff are always very courteous."

Kevin, who is paid Employment and Support Allowance every fortnight, takes out a £700 loan from the union every six months which he then pays back gradually. "It tides me over for things like Christmas and my birthday," he explains. "I pay it back slowly and there is no problem at all, I don't notice it."

As he is facing delays until March in receiving his pension payments, he says the credit union's support is invaluable in helping him to bridge the gap; he also uses their Christmas saving account which can only be accessed from 1 November until early January.

Commenting on the innovative new project, mayor Dan Jarvis said: “Loans are essential for most people to go about their daily lives – from the big purchases such as a house, to day-to-day expenditures to get by.

“However, if people can’t access affordable credit, circumstances may force them to access short-term, high cost credit that is unaffordable. Missed payments and soaring interest rates then keep people in a cycle of bad credit from which it is difficult to escape.

“Through this exciting project, we aim to set an example for other parts of the country.”

If you would like to know more about how to access affordable credit if and when you need it, explore your options today at https://goodcreditindex.co.uk/.