Money Insider: Credit unions are the solution for emergency loans
Saturday 17 December 2011
Missing or being late with a couple of payments on a credit card may not seem much of a big deal to consumers at the time, but these financial indiscretions will damage their credit status and could lead to them paying through the nose for loans in the future.
Although the best buy tables are awash with personal loan rates below 10 per cent APR and countless credit cards advertising 0 per cent interest, people with a recent black mark or two on their credit record are unlikely to be able to take advantage of such competitive deals.
The real problem is that if your bank or building society declines your application for credit, you may end up paying an APR well into three figures to borrow from a non-mainstream lender.
The payday loans industry has grown rapidly during the economic recession, recognising that people are sometimes desperate for some financial breathing space and are seemingly prepared to pay well over the odds for credit.
Borrowing at sky-high rates on short-term loans of 30 days or less is becoming far more common, and now some lenders are targeting longer-term borrowing markets.
A quick look on the internet will reveal that loan brokers such as 12monthloans.co.uk are advertising unsecured loans for terms of 12 months at eye-wateringly high rates of up to 278 per cent APR.
If your own bank isn't prepared to lend to you and you're desperate to borrow money to help get the car through the MOT or get the central heating boiler fixed, then a one-year £500 "payday" loan could see you having to pay back £949 over 12 months.
The problem for borrowers with minor credit issues (we're not talking about serial defaulters with a number of CCJs) is that they don't realise there are other options available to them.
While consumers need to be aware of the importance of maintaining a good credit record, the Government should take a more active role to prevent greater numbers of consumers getting into serious debt problems through easy and expensive credit.
In March this year the Government announced it would make up to £73m available to expand and modernise credit unions over the next four years.
As part of this expansion programme it is considering making credit unions available to communities through the UK Post Office network. There are 465 credit unions in England, Scotland and Wales with more than 870,000 members. The value of loans made to members stands at £475m. However, more importantly, there is proof that they encourage people to save too, with more than £600m of credit balances held with British credit unions.
Mark Lyonette, the chief executive of the Association of British Credit Unions Limited, summed up the situation many people face: "Credit unions have shown they can provide the financial products and services that people on lower incomes need and want but often struggle to get elsewhere."
With Citizens Advice reporting a fourfold rise in the number of people with payday loans coming to it for debt advice in the past two years, the promotion of the credit union alternative needs ramping up, and fast.
Interest rates up as euro crisis bites
The eurozone crisis is starting to affect the man in the street.
The knock-on effect means mortgages are getting dearer, while on the flip side, savers are seeing higher interest rates.
The latest issue of the online instant-access account from AA Savings (Internet Extra) sits proudly at the top of the best buys paying 3.2 per cent gross/AER.
There is the customary bonus element included in the rate (2.7 per cent fixed for 12 months in this case), but it's not really asking too much for customers to make a note in their diary, iPhone or even on the kitchen calendar to switch their nest egg elsewhere when the bonus expires.
Banks are often criticised for their use of promotional bonuses, but a little organisation on your part means you can beat them at their own game.
The AA account is operated online and allows unlimited, penalty-free, instant access to your funds with interest paid annually.
Considering the best one-year, fixed-rate bond was only paying 3.25 per cent at the start of 2011, consumers have benefited from increased competition, and with banks looking to draw in more money via their branches, maybe we'll see some even better deals for beleaguered savers in the next month or two.
Andrew Hagger – Moneynet.co.uk
Buying property overseas? Check out these hotspots
Bargain Hunter: Exclusive discount on a SmartGlider - a self-balancing electric scooter
My Tinder date asked for a refund when I declined a second meet up
10 tips for taking out a personal loan
Number of parents moving to their desired school catchment area is increasing, according to Santander research
- 1 Huawei Mate S and Huawei Watch: new products take on iPhone 6 Plus and Apple Watch
- 2 More than 11,000 Icelanders offer to house Syrian refugees to help European crisis
- 3 If these extraordinarily powerful images of a dead Syrian child washed up on a beach don’t change Europe’s attitude to refugees, what will?
- 4 Senior British politicians tell David Cameron: When dead children are being washed up on beaches, it's time to act
- 5 Make your voice heard: Sign The Independent's petition to welcome refugees
Climate change: 2015 will be the hottest year on record 'by a mile', experts say
Senior British politicians tell David Cameron: When dead children are being washed up on beaches, it's time to act
Jeremy Corbyn calls Osama bin Laden's killing a 'tragedy' - but was it taken out of context?
If these extraordinarily powerful images of a dead Syrian child washed up on a beach don’t change Europe’s attitude to refugees, what will?
If you're not already angry about the refugee crisis, here's a history lesson to remind you why you really should be
Theresa May says migrants should be banned from entering the UK unless they have jobs lined up
iJobs Money & Business
£14000 - £16000 per annum: Recruitment Genius: This company was established in...
£20000 - £25000 per annum + OTE 40k: SThree: SThree are a global FTSE 250 busi...
£20000 - £25000 per annum + competitive: SThree: SThree are a global FTSE 250 ...
Voluntary and unpaid, reasonable expenses reimbursable: Reach Volunteering: St...
Day In a Page
The terraces of this two-bedroom penthouse apartment offer panoramic views that stretch over fifty miles from the cliffs of Beachy Head.
In the heart of the coastal village of Mumbles and moments from the pier, this five-bedroom Victorian terrace is set over three floors and retains many original features.
In a sandbanks location, moments from the beach, this three-bedroom apartment has a large open-plan living area and a south-west facing balcony.
This four-bedroom home has an annexe accessed from the side of the house, with potential for improvement and conversion subject to the necessary permissions.
In the heart of the hamlet of Wardley, this five-bedroom period home offers countryside views and a stylish interior, with original features and open fireplaces.
Offering countryside views and landscaped gardens, this three-bedroom Grade II-listed lodge has a spacious conservatory and a large cellar that could serve as a workshop.
Set in approximately 1.5 acres, this four-bedroom home comes with a second, detached property that's currently used as an annexe.
In the hamlet of Newchurch, this former parish church is now a four-bedroom home complete with clock tower and eyrie.
Offering scenic views from a large balcony and sun terrace, this four-bedroom home has a wraparound garden and a heated swimming pool.
Offering views across the Humber and East Yorkshire Wolds from a glass panelled balcony, this four-bedroom barn-style home befits a life of leisure.
This four-bedroom home offers versatile accommodation with annexe potential; features include a hot tub, sauna and Norwegian BBQ hut.
Well-located for schools, colleges and the town centre, this contemporary thatched cottage offers flexible living space with six bedrooms.
Built in 1907, this four-bedroom Edwardian period home has been refurbished by the current owners, retaining many original period features.
Surrounded by landscaped gardens, this five-bedroom home offers living space across three floors.
This lovely country home in Burnham Market is currently run as a popular holiday cottage, with five en suite bedrooms and colourful gardens.
This three-bedroom 17th-century former village bakery is just a few miles from the East Sussex coast.
Set on a landscaped plot, this light and airy four-bedroom home comes with a log burner in the lounge, a fitted kitchen and an open-plan ground-floor layout.
Set sail for this four-bedroom farmhouse in Cowes. With five acres of land and an indoor pool, this home oozes character. There is even potential to let a one-bedroom annexe.
Built on a former chapel site, this impressive four-bedroom home boasts balconies, stunning views and contemporary modern living.
This three-bedroom house is situated in a quiet mews and set over three floors. Features include glazed staircases and high ceilings.
A period townhouse set over four floors, this five-bedroom home was built in the 18th Century and retains many original features.
With five bedrooms, this spacious home offers beautiful gardens and modern interiors - set within the popular market town of Bingley.
A few miles from the seaside at Perranporth, this four-bedroom farmhouse sits amongst nine acres of idyllic grounds - including a lake and two barns used as holiday lets.
In the pretty market town of Bungay, this grade II-listed Mill House is arranged over four floors, offering four bedrooms and three reception areas.
This first-floor flat comes with two bedrooms, an impressive open-plan reception room and two lovely roof terraces.
This five-bedroom home comes with a range of outbuildings including a large barn which could be converted into a self-contained granny-flat or rental.
Moored at Taggs Island and reached via a pretty garden, this two-bedroom houseboat has a vaulted reception room and skylit garden studio - currently a beauty salon.
On the edge of the city, this six-bedroom home comes with an outdoor swimming pool and a large garage block that has annexe potential.
A contemporary house spread over three storeys, this three-bedroom detached home has large sliding doors that open out to the River Quaggy.
Moored in Chelsea's Cheyne Walk, this houseboat offers two double bedrooms and a teak deck that's ideal for al-fresco dining.
This former village bakery, dating back to the 17th century, is now a three-bedroom detached home just a few miles from the East Sussex coast.
On the picturesque Isle of Man, this four-bedroom character home has a ground-floor shop that's currently run as a newsagents and a flat that would make an ideal holiday let.
In a new collection of flats, this first-floor two-bedroom apartment offers ample entertaining space and a prime view of Furze Green from a private balcony.
This three-bedroom stone-built cottage currently trades as the village store with a restaurant in the annexe and family accommodation on the upper floors.
Previously two semi-detached properties, this five-bedroom home is spread over three floors with a large breakfast kitchen, orangery, office and gym on the second floor.
This five-bedroom home enjoys countryside views over the Blyth estuary to Southwold, offering flexible living space with a ground-floor annexe - ideal for use as a holiday let.
Close to the market town of Eye, this four-bedroom detached home offers a double-height living room which takes the place of the original, 19th-century, chapel nave.
Dating back to the 19th century, this four-bedroom home needs modernising. Spanning three storeys, the red-brick house has a fireplace, a small terrace and a cellar.
Just outside of Cambridge, this single-storey home offers three double bedrooms, a living room with vaulted timber ceiling and ladder steps that lead to a mezzanine study area.
This six-bedroom Georgian home is on three floors with open fireplaces, a two oven Aga, an annexe, and cottage gardens with outbuildings and a car barn.
A former coach house, Glebe Farm Stable is now a three-bedroom cottage with a double car barn, an attached office, kennels and an outbuilding that's currently used as a gym.
Located beside an impressive Victorian viaduct, this four-bedroom home has an open-plan living area that is glazed on two sides, with skylights and high ceilings.
A former furniture workshop, this three-bedroom home has high ceilings and painted brick walls, in a village setting only fifteen miles from the coast.
This five-bedroom stone townhouse features a pine staircase and an Inglenuk fireplace, double doors from the lounge give access to an enclosed courtyard.
This five-bedroom, detached home blends traditional and modern design; the sleek kitchen features a gas hob and oven set within an exposed chimney breast.
Capitalise on the fabulous views of Trevone Bay by taking two homes and creating one spacious boutique B&B. Just a cliff-top walk from Padstow.
Surrounded by woodland, this five-bedroom manor house has plenty of outdoor storage space in the form of three converted loose boxes, two smaller outhouses and a woodstore.
This six-bedroom home is set amongst three acres of grounds. Currently a large family home, Clift Hill has potential to make a B&B or countryside retreat, subject to change of use permissions.
This Grade II-listed three-bedroom home is situated on a private road, just a short walk from the sandy beaches of Frinton-on-Sea.
Less than five miles from Malmesbury, this four-bedroom cottage comes with equestrian facilities and gardens that extend to approximately three acres.