Two in three credit card users don’t know how much interest they are paying

Are you deluged in debt due to the cost of living crisis and those Christmas bills. Well toddle down to your friendly local credit union for some sage financial advice and maybe a consolidation loan at half the extortionate rate of interest charged by banks on credit cards. So says David Malone, CEO of the Irish League Of Credit Unions (ILCU), which has €15bn in savings that it’s quite keen to lend out – and with no interest rate hike in sight.

We all want credit unions to really challenge banks with a wider range of products. How is it going?

One in ten new current accounts opened are with a credit union. Nearly half of unions in Ireland now offer current accounts and internationally recognised debit cards. I have a current account. It has Apple Pay and Google Pay and you can use them worldwide. We have a debit card but I actually just use Apple Pay through the current credit union account and it is just really excellent. The sector has more than 40% of the personal lending market and continues to increase its presence in the mortgage and SME lending markets. Credit unions are already the de facto community bank.

What about online banking?

Nearly eighty credit unions are offering online current accounts.

How do credit unions help with people’s horrific credit card bills after the Christmas spending spree?

Yes, rates on credit cards are quite high… yet two in three people do not know how much interest they pay. A credit union cares about its members and provides that kind of financial education. It sits down with them and sees what solutions can be put in place to help them manage credit card debt.

Are unlicensed moneylenders still a problem?

We’ve had instances of people coming in to us – particularly vulnerable people. Last year we issued 200,000 loans of less than €2,000 and that’s very much linked in with this (fight against moneylenders). We’re interested in those lower value loans and that’s where we can have a role for the money lender issue.

Will the Consumer Credit (Amendment) Act help to stop moneylenders taking advantage of vulnerable people?

The Act is a welcome first step in placing a cap on high-cost moneylenders. What is also important is the mechanism which allows the Minister for Finance to further reduce the cap as he sees necessary. The ILCU welcomes the initial interest-rate cap of 1% per week and maximum interest rate set at 48% (compared to up to 288% previously). The ILCU has long campaigned for the introduction of an interest rate cap on moneylenders.

Have credit unions plenty of money to lend?

We’ve €20bn in members’ savings. We lent out €5bn. So there’s €15bn accessible (for loans). We’re very keen to lend... that’s the message.

What was your own first credit union loan?

My first loan was for a car. I think it was a Fiat Punto. It was a good deal. I didn’t overstretch myself.

What would you do if you were finance minister for a day?

Abolish those pesky four levies on credit unions that are really a stealth tax on members perhaps? That would be one thing. I’d look at the financial services sector as a whole.

I would ensure that the level playing fields because competition and choice is critical.