The coronavirus pandemic has caused hardship for thousands of people in our communities. An ethical Community Investment in the Credit Union could help us provide financial support to some of society’s poorest members.
For many people, the ability to borrow money can make the crucial difference in being able to replace a broken cooker or simply being able to buy school uniforms for the kids. More and more people are having to take out loans but, with a lack of options, they are often forced to turn to high interest providers. With payday lenders charging APRs of up to 7,000%, these loans cost a fortune and often leave people unable to afford basic foodstuffs.
As a co-operative, the Credit Union believes in the principle of mutual self-help rather than charity. It encourages saving rather than borrowing, with the savings being pooled and ‘reinvested’ into the community in the form of low cost ‘Saver Loans’. These low cost loans can then be accessed as an alternative to high interest credit by the less advantaged in our community.
By making a Community Investment in the Credit Union, you could help some of the most vulnerable in society stay out of the clutches of loan sharks or high cost lenders and set them on the path to building up a pot of savings for the future, providing a route out of debt.
It costs nothing to make a Community Investment. The money you invest remains your money and can be withdrawn on demand, normally within five working days. Savers are also paid an annual dividend on their savings, which is a distribution of surplus in the lending business. In addition, your savings with the Credit Union are protected under the Financial Services Compensation scheme.
According to Credit Union Chief Executive Martin Groombridge, access to the Credit Union’s low cost credit is vital for many people.
“Interest on our Saver Loan starts at just 12.7% APR on the reducing balance of the loan and greatly reduces the cost of borrowing for some of society’s poorest members. Financial analysis shows that for every £1 we lend to members, they save a full £1.25 over the course of a year in interest payments, bank charges and fees.
“By way of example, a £1,000 Community Investment in the Credit Union could provide a community benefit to borrowers of £1,250 after one year, £2,500 after two years and £3.750 after three years.”
Find out more about making a Community Investment in the Credit Union.