Credit Unions in Tralee and Killarney have launched a ‘Pilot Personal Micro Credit Project’ which makes small, affordable loans available to people and families on Social Welfare in North and South Kerry.
The scheme is a drive to combat moneylenders in the lead into Christmas and the new year and it is being piloted in over 30 credit unions offices across the county.
Open to Social Welfare Recipients
It is being run in partnership with the Department of Social Protection, the Citizens Information Board, the Social Finance Foundation and An Post and is open to social welfare recipients. Those who would like to avail of this type of loan will need to join Tralee Credit Union or Killarney Credit Union – if they are not already a member – and sign up for repayments to be made to the loan via the Household Budget Scheme which is run by An Post.
Penal Rates Charged by Moneylenders
“We are delighted to take part in this pilot scheme. We are all well aware of the penal interest rates charged by moneylenders, both legal and illegal, in local communities. This pilot scheme will highlight that the credit union is a real option for people who are on social welfare in our area,” said Mark Murphy, CEO, of Killarney Credit Union.
“Credit unions have been particularly vocal throughout the recession years about the dangers of using moneylending services as in many cases, those who avail of this type of credit are getting trapped in a cycle of debt which is very hard to break free from.”
“The target audience for the scheme are those who are excluded from mainstream credit. Essentially, the aim is to offer small loans to those using or considering using a moneylending service,” Fintan Ryan, CEO, of Tralee Credit Union explained.
“The project is working to create a realistic offering to counter the ‘convenience and ease’ advantage that moneylenders have in this country. An eligible person can apply for a loan of between €100 and €2,000. This type of loan will be distinct from a standard credit union loan,” said Mr. Ryan.
Rates of 290% or Higher
The Central Bank estimates that about 360,000 people are using moneylending services in the Republic of Ireland. This is based on a 2013 Report on the Licensed Moneylending Industry in Ireland.
This does not take into account those using unlicensed operators. Interest charged on loans from moneylenders can be 290% or even higher. The maximum interest rate which credit unions can charge is 12% (12.68% APR).
Credit unions have been particularly vocal throughout the recession years about the dangers of using moneylending services as in many cases, those who avail of this type of credit are getting trapped in a cycle of debt which is very hard to break free from.
Information on the pilot scheme will be available in Money Advice and Budgeting Services (MABS) and St. Vincent de Paul offices which are in the vicinity of the participating credit unions.
More Affordable Credit
Commenting on the initiative, John Mark McCafferty, Head of Social Justice with the Society of St. Vincent de Paul, said:
“We have been advocating for an alternative to high cost moneylenders for some time and we warmly welcome the leadership shown by credit unions in the pilot to provide this product for people on social welfare who are eligible. We are working with our credit union colleagues locally throughout the pilot sites in order to ensure take-up of the scheme and more affordable credit for the households we assist.”
A list of participating credit unions is available at https://www.facebook.com/itmakessenseloan
For additional information, please contact Tralee Credit Union with a click on the advert icon here.
