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It does you credit

Credit unions are looking to challenge the banks by targetting communities and the issues that affect them, and helping them
Credit unions are looking to challenge the banks by targetting communities and the issues that affect them, and helping them
Credit unions are preparing to take market share from the big banks, as they focus on the issues that affect communities.

Credit unions are gearing up to take market share from banks, with a genuine commitment to improving the circumstances of the communities they serve and a savvy eye for new developments that make them a realistic alternative.

As much is evident from meeting Michelle Howlin, who at just 35 is chief executive of Waltham Forest Community Credit Union. An economics degree graduate, with an MSc in local economic development from the London School of Economics, Michelle has led the credit unions’ 5,000 members, nine staff and 43 volunteers, since August 2012.

She is busy rebranding the organisation as the East London Community Credit Union and reforming its image, while bedding down other recent developments such as the adoption of the credEcard debit card as part of a move to facilitate instant credit transfers. Michelle explains this eliminates a lot of manual handling and money can reach accounts rapidly. She adds “the card means that we are not tied to the office, so effectively, we can do loans elsewhere using the automated cash transfer facility.”

Why join a credit union
if you’re not poor?

• They don’t pay fat-cat salaries unlike banks, and some other mutuals (see Co-Operative Bank), and all profits are distributed amongst members.
• They are a way of helping poorer people in your neighbourhood with a hand up rather than a hand out.
• They are the front line in the battle against both legal (see Payday lenders) and illegal loan sharks.
• You may be relatively well-off but still have little idea about budgeting, which credit unions put at the heart of their service.
• Long-standing members with good credit histories can get loans at rates that beat the high street.
• Getting you child membership of a credit union can instil financial responsibility from an early age – as well as giving them attractive rates for their savings.

This is part of a drive to increase the capacity of the organisation: “automating the lending process is freeing up staff and we are ready to start same-day lending. We are developing an online banking platform which is to go live during 2015 and which will rival the offerings from banks. Locally, we are looking to provide business and community lending, larger loans which will effectively subsidise other lending activities.”

Possible future developments include Shari’a-compliant loans and savings for the large local Muslim community.

However, Michelle has not taken her eye off the payday lender battle, in which local Waltham Forest MP Stella Creasy is involved. She says the presence of payday lenders in Walthamstow “can lead to problems, mainly because people do not realise what they are getting into. For instance, we recently had the example of a working woman in her 60s who had loans from six different payday lenders. This reflects a lack of knowledge, which is fairly typical and all too often we are seeing people too late in the process. This can result in huge charges being imposed by these lenders when we pay off such loans.”

But banks are also throwing up problems: “One of the things we have noticed recently is that some people are regularly getting charged by banks if they go into overdraft, whether authorised or not. In some cases this can mean a charge of £100 a month. It would be much cheaper if they took out a loan from us to pay such things off.”

You can find your local credit union on the web site of the Association of British Credit Unions Ltd: www.abcul.org/home.

By Stephen Spurdon

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