People across Scotland are being urged to consider credit unions as an ethical and affordable alternative to payday loans. The Scottish Government’s ‘12 Days of Debtmas’ campaign is aimed at people who may get into financial trouble in the run-up to Christmas by using high interest, short-term credit.
Over 350,000 people across Scotland are members of credit unions; co-operatives that are owned and managed by the people who use them. Members are encouraged to save monthly, even if it is only small sums. They can borrow at competitively priced rates and in some cases, in a short timescale.
First Minister Alex Salmond recently announced plans to protect consumers pledging payday lenders would be subject to tougher regulation in an independent Scotland.
Speaking at Grampian Credit Union, Enterprise Minister Fergus Ewing said:
“The Scottish Government is very concerned about the growth of payday lending and the impact that high interest borrowing, especially in the run up to Christmas, has on people in Scotland.
“This campaign raises awareness of credit unions and also promotes their affordable lending solutions to people in the lead up to Christmas, and after the festive period, when bills start to arrive.
“People across Scotland can join credit unions and not just for hard pressed communities – all sorts of people could use credit unions to save and to take out loans at manageable interest rates.
“You can join a credit union and in some cases, borrow money in a short timescale. It costs significantly less to borrow money from a credit union than taking out a payday loan and you receive much more support in managing your finances.
“I welcome the changes that have been made at UK level but I continue to press for firmer action. To protect consumers, payday lenders would be subject to tougher regulation in an independent Scotland.”
Scotland’s main faith groups, consumer groups and debt charities have all welcomed the campaign.
Margaret Lynch, Chief Executive of Citizens Advice Scotland said: “Payday Loans are one of the main issues that we see today in the CAB service. Across Scotland our advisers are currently seeing over 100 cases every week of people who are having problems with a payday loan. That’s an increase of a third in such cases since this time last year.
“We back the Government’s statement today, and are keen to spread the message to consumers about the dangers of high-interest loans. To people who might be considering taking out a loan we say: Be very careful about what lender you use. Payday loans might seem convenient today, but they can lead you deep into debt.
“Shop around for a better deal. There are other lenders, like Credit Unions, with loans that are easier to repay. In particular, if you are already in debt to a payday lender, avoid roll-over loans with the same lender.”
Frank McKillop, Policy & Relations Manager (Scotland), Association of British Credit Unions Limited said: “People across Scotland from all walks of life join credit unions to take control of their finances – saving for future expenses, borrowing responsibly at affordable rates, and accessing other financial products from ethical local providers.
“We hope this campaign will attract many more people to join a credit union and take a responsible approach to their finances, rather than being drawn to the sort of short term fix which often makes money problems worse.”
John Deighan, Catholic Parliamentary Officer said: “The effects of high interest loans on the poorest in society is devastating. Usury has been condemned throughout the ages for oppressing the poor through unreasonable and irresponsible lending.
“Yet our society is effectively permitting the practise supported by slick television and media commercials. It is right that political action seeks to highlight alternatives and ensure reasonable access to credit without the crippling interest rates that so many are enduring.”
The ‘12 Days of Debtmas’ radio and online campaign begins today.
You can find your nearest Credit Union by checking the ‘credit union finder’ at the following link: www.12daysofdebtmas.com
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