WIREDGOV

Minister for Communities and Tackling Poverty, Lesley Griffiths, has warned people in Wales against borrowing from pay day loan companies and high cost money lenders this Christmas.

Visiting North Wales Credit Union, the Minister said credit unions offer an affordable alternative to high-cost credit, especially when people are unable to access mainstream financial services.

Credit Unions never charge more than 3% interest a month on the amount owed. Typically, the interest charged on a £400 loan from a credit union which is paid back in a month is £12, while the interest on the equivalent loan from a traditional payday lender is £120 - a huge £108 difference.

Likewise, an affordable loan of £500 over 12 months from a credit union can save £340 in interest payments when compared to a typical door step lender.

Last year the Welsh Government announced funding of £1.9million to encourage more people to use credit unions and help the organisations to develop the services and products they provide for customers.

The Minister for Communities and Tackling Poverty, Lesley Griffiths, said:

"Many people's budgets are already stretched because of the current economic climate. The added financial pressures Christmas brings means a pay day loan may seem to be a good option at this time of year. However, high-cost credit puts people at risk of doubling their debt and going into the New Year with serious financial problems.

"Credit unions are run for communities by communities and offer a real, reasonable alternative. I want to increase the profile of these not-for-profit organisations so more people across Wales have access to affordable financial services.

"I was pleased to meet staff at North Wales Credit Union to see how the organisation is gearing up for the busy Christmas period and providing ethical financial services to people in North Wales."

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