Credit unions receiving more funding in Derbyshire

Credit unions have been touted as the answer to the growing payday loan problem in the UK.

Indeed, the Archbishop of Canterbury has said the church intends to eradicate the companies by competing with them using the service.

Now, in an attempt to help solve the crisis, Derbyshire County Council has provided credit unions in the area with £300,000 in order to make safe and affordable instant access loans available.

Credit unions are starting to play an important role in supporting people struggling with debt and low incomes by offering them access to affordable credit and by encouraging saving.

Funding for the project was approved by the government on July 30th and the detailed proposals are to be considered at a health and communities meeting on August 20th.

Derbyshire County Council cabinet member for health and communities Councillor Dave Allen said: "When people are struggling to make ends meet and put food on the table for their family any offer of money to get them through the week can be tempting.

"But these quick financial fixes come at an extremely high cost and it is sadly financially vulnerable people who can afford it the least who are preyed on the most."

The local authority wants to help people struggling with money issues and those on low incomes to get back on their feet, without needing to turn to extortionate payday loan companies offering short-term high-cost credit.

It has already been successfully piloted in Chesterfield and North East Derbyshire with credit unions offering people the chance to get hold of instant loans of up to £500 with repayments secured by direct deduction from benefit payments to ensure a low rate of defaults.

If people are struggling with debt it is important to explore every option as turning to a payday lender can result in even more problems. Debt consolidation loans can potentially be a good way of reducing monthly fees and are worth considering should individuals owe money to multiple parties.

By Amy White