Cost-of-living crisis: district credit union warns of payday loans and loan sharks

Now the credit union CLEVR Money, the credit union for Preston, Blackpool, Fylde, Wyre and Lancaster, has warned of the financial disaster many could face if they resort to high-interest borrowing.

The warning comes as the Credit Union, a nonprofit with around 5,000 members, reported receiving a rising number of loan applications.

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CLEVR Money managers Anthony Brookes and Jackie Colebourne

Anthony Brookes, Loan Manager, said: “The rising cost of living is certainly hitting people in our communities hard and we are definitely seeing an increase in loan applications as a result. However, in recent months we have seen more and more people requesting smaller amounts to ‘bridge’ them to cover unexpected costs and even pay bills and general expenses.

“The most worrying factor is the increase in workers reaching out to us, those who were just making ends meet on wages but are facing significantly higher expenses without a pay rise. Just some of the new fuel bills scare them.”

He continued, “We know people are turning to other forms of lending, such as B. payday loans, buy it now, pay later, and even loan sharks, which are of great concern to us. This type of loan can go bad very quickly as the debt spiral mounts, penalties and fees are imposed, or more money is lent without the borrower having the means to repay it.”

The credit union helps people avoid debt by encouraging savings and providing what it calls “responsible lending.” Anthony said: “We fear that rising bills will force more people to take out credit from these lenders and that is why we are working hard to encourage them to come to us first, an ethical and responsible not-for-profit co-op that really cares well-being cares for them.”

Anthony noted that most loans used to be for “specific things…to cover the cost of big expenses like home renovations, car repairs, holidays or Christmas for example,” but said the situation is changing.

A credit union can help people with debt reduce the cost of paying off their loans by combining existing debt into a consolidation loan.

Anthony said, “This will pay off a number of smaller but fast-growing high-interest debts and replace them with a single credit union loan at an affordable rate.” It’s really brave when someone comes to us with a bunch of debt and asks for one Debt consolidation loan, but worth it if you feel the relief of getting your finances in order right now in the face of inflation and rising costs.”

You can apply for membership if you live or work in the PR1 – PR5, FY1 – FY8 and LA1 – LA2 postcode areas.

You can also become a member if your employer is a Payroll Partner.