More people choose credit union option to help pay the bills

Dozens of residents have joined a county savings and loan scheme over the last 12 months.

At the end of March, the Northumberland Credit Union had about 450 members and more than £147,000 in member savings, of which £112,000 was out on loan.

In the 2013/14 financial year it made 143 loans totalling over £150,000, including to some of the 70 new members. Since the organisation started, it has made more than 700 loans that add up to over £575,000.

The union does not do external credit checks, instead members build up an ‘internal’ credit rating by saving regularly. Loans are normally repaid over 12 months at 12.7 per cent APR and can be up to £3,000.

Chairman Nic Best said: “If you show us you can save say £5 a week or £50 a month, then we assume you can repay a loan at £5 a week or £50 a month and if you’ve repaid a loan and built up some savings, you’ll be eligible for a bigger loan.

“We also help the county council run a Repossession Prevention Fund, drawing on Government money. This allows anyone at risk of being evicted due to mortgage or rent arrears to apply for an interest-free loan to pay the arrears off.

“Applications are assessed by Citizens Advice Bureaux and loans can be for up to £5,000 – repayable over five years.

“Of course, applicants need to be able to pay off the loan and keep paying their rent or mortgage, so it isn’t really a measure of last resort.”

Credit union members do not get interest on their savings, though being a co-operative means it can pay a dividend.

However, accounts can be opened for junior members (0 to 17 years) which pay three per cent p.a. interest on the first £500 of savings.