CASH HELP AT THE DOUBLE

TWO TRUSTED WAYS TO ACCESS FAIR CREDIT IN TOUGH TIMES

MILLIONS of people are one bad month away from financial breakdown without the safety net of credit cards and loans as banks get tougher about who they will lend to.

And it’s the most vulnerable finding it more difficult to access the credit they may need to get by.

While it’s good news several high-cost credit firms have been shut down, the unintended consequence is that people with poor credit scores have fewer options and are more likely to resort to illegal lenders.

But there is help at hand that many people are unaware of, or believe they won’t be eligible to access. It comes from a longestablished British dynamic duo.

Credit unions and community finance can be a lifesaver for those needing small amounts of credit.

They have been around for decades, saving millions from being forced to turn to high-cost lenders and loan sharks. And these institutions can also help you manage money better and build up a savings safety net.

New figures from the Bank of England show loans made to members of the UK’s 388 credit unions stood at a record high of £1.92billion in the last three months of 2022.

Robert Kelly, chief executive of the Association of British Credit Unions, said: “Credit unions will continue to serve communities and employers in these testing times through the provision of ethical and responsible products and services.

“Many are embracing the change to digital and on-demand customer service, which is attracting younger members.

“Credit unions offer members the safety net of access to fair and affordable credit from local organisations that have their interests at heart whilst helping them build financial resilience through savings, however small.”

But, what are credit unions and community finance? And how can you find ones near you?

CREDIT UNIONS

These are not-for-profit organisations, owned and operated by members, which means they put the needs of their members first. They offer loans, savings and insurance at fair and affordable rates.

There is a cap on what they can charge for loans at 3% a month or 42.6% a year APR.

They can offer products at some of the best rates on the market.

Are they regulated?

Yes. They are regulated by the Financial Conduct Authority and the Prudential

Regulation Authority – so your savings are protected up to £85,000 through the Financial Services Compensation Scheme.

Who do they help?

Everyone and anyone. They are available across the country.

There are more than 380 and you will be able to find one that you’re eligible for.

Some are for certain professions, some are run by church groups or trade unions, while others work with local employers and people living or working in the same are. Others operate nationwide.

COMMUNITY FINANCE

Community finance providers are mostly not for profit, meaning they are able to reinvest any surplus funds into serving vulnerable customers by keeping interest rates and repayment as low and flexible as possible. They typically make short-term loans of around £400 to £500, and can save customers typically around £200 compared with borrowing from alternatives. You can borrow and save with most community finance firms. This helps you get access to cash you need now while building a rainy day pot to help prevent you from having to borrow again if an unexpected bill turns up.

Are they regulated?

Yes, they are all fully regulated. If in doubt, you should check the Financial Conduct Authority’s financial services register at register.fca.org.uk.

Who do they help?

They assess people for loans, even those with a poor credit score.

If they can’t offer one, they may be able to refer you to benefits calculators to ensure you aren’t missing out on financial help, or flag up other additional support from debt advice charities.

Community finance lenders will only give loans to people who can afford the repayments, so you have to demonstrate that you will be able to do this. But they also support people who run into trouble with repayments and will be as flexible as possible to help you get back on track.

FIND A CREDIT UNION

Search more than 380 credit unions so you can find the one that you are eligible to join and that best suits you at findyourcreditunion.co.uk

FIND COMMUNITY LENDERS

Responsible finance providers, also known as Community Development Finance Institutions (CDFIs), social lenders or community lenders, let people borrow money at fair and affordable rates across the UK.

Visit findingfinance.org.uk to find providers in your area.

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There is help that many are unaware of or they wrongly believe they can’t access it