HELP is at hand for hard pressed Redditch families paying mind-boggling rates of interest for essential household goods.
For the first time in five years a credit union is returning to the town offering loans at highly competitive rates compared to pay day loan companies, high street stores and loan sharks.
The 6Towns Credit Union and REACH CIC, with additional funding from Church Hill Big Local, has opened at The Link in Winyates Centre and at Willows Trees Community Centre in Church Hill.
Driving the project forward is community enterprise co-ordinator Liz Williams who said: “The need is huge and it’s getting worse and worse for people out there.
When you save with a Credit Union that money is there for people who cannot afford to borrow from someone else.
“It allows people to have low cost loans, for example when you cannot have a bank account and it gives people the chance to put a little away for an emergency.”
Some of Redditch’s poorest families are paying astronomical rates of interest on loans to tide them over.
Liz quotes legitimate companies charging an annual percentage rate (APR) of 661.8 per cent on a £200 loan over 26 weeks – with a weekly repayment of £29.72 making a total repayment of £713.09. Some have representative APRs going even higher, to 1,272 per cent and beyond.
For the same £200 6Towns would charge a competitive APR of 26.8 per cent over 52 weeks with a weekly repayment of £4.80 for a total of £230.21.
The credit union also compares favourably with high street stores like Bright House.
Business development officer Shannon Gawn said: “If your washing machine breaks down, people tend to go straight to Bright House. They think ‘oh, it’s only £7 a week’ but in fact they end up paying much more than the value of the goods.
“I can show it is much, much cheaper going through the credit union and even if people miss a payment or two we can be flexible and at the end of the repayment period they will own it outright.
“We can also help people who may not be able to understand interest rates,” added Shannon.
Borough mayor Councillor Joe Baker, who officially open the new credit union, said: “This is a really important event for the town – it will be there as a help and a support for those who are not financially well off and need help when something goes wrong.
“In these times of austerity so many families find themselves in difficulties and I would encourage them to use the credit union rather than turning to moneylenders who have interest rates so high repayments are unaffordable.”
To contact the credit union, pop along to The Link in Winyates or Willow Tress in Church Hill or call 01527 528340