With Christmas less than a month away, HI-Scot Credit Union is backing the Scottish Government’s new campaign urging the public to consider credit unions instead of payday lenders this Christmas.
The 12 Days of Debtmas campaign, which is running in press, on radio and online, aims to highlight the financial options available to most Scots through their local credit union and is urging the public not to get into a financial hole this Christmas by avoiding expensive high interest lenders.
Christmas can be a challenging time financially, with the additional costs of presents, food and celebrations on top of regular monthly bills and payments. As a result, many are faced the hard decision to borrow money to tide them over and payday loans can seem like a quick fix.
However, such creditors often charge interest rates of over 5,000% APR. This is a huge figure when compared to credit unions, which are restricted by law to lending at a maximum of 2% per month (26.8% APR), with many offering lower preferential rates.
HI-Scot Credit Union, which is available to members living/working in the Highlands and Islands currently serves 2,000 members and offers a range of ethical loan products designed to help people in the community in need of financial support. Over 300,000 people in Scotland are already using credit unions, co-operatives that are owned and managed by the people who use them.
Those looking to borrow money can choose from a range of products including a ‘Freedom Loan’ which enables members to apply for funds up to £3,000 with an APR of 26.82%.
David Mackay, general manager of HI-Scot Credit Union, said: “It is extremely encouraging that the Scottish Government has recognised the role credit unions can play in helping people sensibly manage their finances. Many people just won’t have considered a credit union, so won’t even know it is an option for them. Whilst saving is at the heart of what we do, we also provide a range of loan products at preferential interest rates, designed to help our members when they need it most.
“Christmas can be a difficult time and I would urge anyone worried about their finances over the next few weeks to look at their options and consider joining their local credit union. Unlike other creditors, we can help by providing people with ethical financial products that don’t come with extortionate interest rates. We also work with each member to ensure they are not borrowing out with their means to set up sensible repayment options.”
Often mistaken for the poor man’s bank, credit unions support a variety of members’ needs, working closely with them to promote responsible borrowing. In addition to encouraging members to make regular savings, many credit unions provide similar services to banks including mortgages, ISAs and, current account facilities.
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.”
Unlike payday providers, credit unions are member-owned and seek to look after the welfare of their members; basing loan decisions on each individual member’s ability to repay the loan. Should a member’s circumstances change, HI-Scot CU will work with them to help them as much as possible; a clear distinction between the credit union movement and payday providers.
Residents in the Highlands and Islands looking to find out more about HI-Scot CU can do so by visiting www.hi-scot.com or calling 01851 701865.