Anne McTaggart MSP has expressed her concern that pay day loan companies – a part of the financial industry that is responsible for the economic crash – is continuing to profit from some of the most deprived people in our communities, and said that Credit Unions are a viable alternative to these morally bankrupt companies.
McTaggart was speaking in the Cost of Living Labour Party business debate.
Companies offering payday loans have increased their market share by over 400% in the last three years. They represent a significant presence on our high streets in towns and cities across Scotland. It is easy to understand the temptation of a cash advance on a monthly wage, particularly for those in low-paid employment with household bills that consume the majority of their earnings. However, we also know that the interest rates on Payday loans are nothing short of exploitative, with a loan of £300 over a period of 30 days costing around £100 in interest and fees alone.
Anne McTaggart MSP said: “I believe that Credit Unions hold the answer. As a Glasgow MSP who is active in the cross party group on credit unions, I am delighted that one in five Glaswegians is a member of a credit union. Drumchapel Credit Union provides short term loans to over 3000 registered customers in the local area with an APR of between 15 and 26%.
Families that need access to affordable credit within a short timeframe have limited options, and are often unaware of provisions made by local organisations and charities in their communities, specifically designed to offer support to those in these circumstances.”
Drumchapel Credit Union was the very first to be established in Scotland, and has for over 40 years provided families in Drumchapel with affordable credit to meet unexpected financial demands, such as the huge rise in the cost of energy for households over the last few years. Customers are encouraged by a team of staff and volunteers to repay loans over a longer period of time in order to spread the burden, and develop a financial plan that details how their monthly income meets expected outgoings, in order to ensure that in the future short term loans are not something that should be relied upon as a source of income.