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Brits turn to credit unions as alternative to payday lenders

  • 15/12/2015
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More people are turning to credit unions in the wake of government price caps on payday loans, with one union reporting a 25% increase in borrowing this Christmas.

Kensington-based Your Credit Union said the surge in business is due to caps imposed by the Financial Conduct Authority on interest and fees on all high-cost short-term credit loans.

Since January 2015 there have been limits on the amounts payday lenders can charge customers, with interest and fees capped at 0.8% a day and the total cost of a loan limited to 100% of the original sum.

William Rhodes, chief executive of Your Credit Union, said: “This time last year some people were paying up to 5,000% interest on cash they borrowed to buy Christmas presents. Many were unable to sustain ruinous repayments and the New Year could mean a visit from the bailiffs.

“We are here to help people take control of their money by encouraging them to save what they can, and borrow only what they can afford to repay.”

Credit Unions cannot legally charge more than 3% interest per month, which works out at a 42.6% APR.

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