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Are you up for the Archbishop’s Wonga challenge?
Whatever your faith, if any, we invite you to support the Archbishop of Canterbury’s aim to put Wonga and other payday loan companies out of business through competition. By saving with Northern Oak, your local Credit Union, (NOCU) you can help other people avoid getting sucked into a cycle of debt and despair. Anyone who lives or works in North Tyneside can join.
NOCU, a non-profit making financial co-operative, encourages saving and makes affordable loans to members, including people who may have been refused by the banks and might otherwise be tempted to go to a payday loan company, or to a loan shark. NOCU loans are much cheaper, and repayment is over a more realistic period, at least three months.
Chief Officer Dave Hall explains “High charges and interest rates on a payday company loan mean that people can often find that when they’ve paid off the full amount they still haven’t solved their financial problem, and are tempted into a roll-over loan, with more and more crippling charges.”
“Loans aren’t restricted to existing savers with NOCU. Generally, we make loans to members who have been saving for at least a few weeks. But we do keep some funds available for instant loans of up to £300 in emergencies. Because there’s a greater risk in those circumstances, the interest repayable would be a bit higher – 2% a month (26.8% APR) rather than our usual 11/2% a month (19.6% APR). Interest is charged on a reducing balance basis. There is no arrangement fee, no hidden charges and no penalties for repaying the loan early. Payday lenders commonly charge interest equating to over 4,000% APR.”
“We’d like many more people to borrow from us, but we’re not well known. Our publicity budget is tiny in comparison with Wonga, and we’re also limited by the how much members have paid in. If we could have many more savers – lump sum, regular amounts, or just something every now and again, and if we could get more employers to include us in payroll deduction savings plans we’d have more money to lend out.”
It sounds like we all ought to be joining NOCU and saving – would our money be safe? “Yes, we’re a member of the Financial Services Compensation Scheme, just like banks and building societies. The only downside for savers at present is that they’d receive no return on their savings. Of course, the best interest rates available anywhere at present are next to nothing anyway.”
“We’re coming up to Christmas, and people are beginning to worry about how they can meet the cost. Unfortunately, many will look elsewhere for a loan, or will load expenses onto credit cards. They then have to face reality in January, which can be a desperate situation.”
So what can we all do? Spread the word, of course, but also think about saving with NOCU – the cost in ‘lost interest’ would be negligible. Perhaps transfer something from existing savings, or re-direct a proportion of future savings? If you were thinking of giving away your Winter Fuel Allowance (in spite of soaring fuel costs) you could put it into NOCU savings, making it work for others, and it would still be there for you to call on if you needed it.
‘Think before you borrow this Christmas’; ‘Avoid a Christmas debt hangover’
or: www.capuk.org (enter your postcode)