Steer clear of debt traps local credit union warns

The warning comes in light of fears that those desperate for extra cash to meet the cost of Christmas will be taken advantage of by lenders with high interst rates and inflexible payment plans.

The credit union warns that interest can often reach 1,500%, meaning that borrowers could end up paying back three times the original amount.

Tony Hood, Castle & Minster Chair to the Board of Directors, said: “We would like to encourage everyone in need of a loan to tie them over Christmas, to talk to us, rather than one of the 1,700+ illegal money lenders that have been identified nationally.”

Credit Unions are not allowed to charge more than 2% interest a month so offer much more affordable lending than elsewhere.

Castle and Minister also helps members set up savings accounts to reduce their need for loans.

Mr Hood said: “Just a few pounds each week can soon amount to a nice nest egg which can be used in times of need.”

They also help people find advice on budgeting and dealing with debt.