Last weekend, the credit union sector was again the focus on Moneybox Live on BBC Radio 4. The show featured ABCUL’s Head of Policy & Communications, Matt Bland who spoke about the benefits of a credit union child benefit loan and why there has been a rapid rise in demand for the product.
Credit unions across the country say they are seeing much greater demand for the facility where a parent or guardian can borrow up to £500, when they arrange for their Child Benefit to be paid into a credit union account. Enterprise Credit Union say Child Benefit Loans are a key driver of their success and that 70% of all their borrowers pay by Child Benefit.
A member of Hull & East Yorkshire Credit Union featured on the programme last week. The credit union has seen an increase of 35% in members using the Child Benefit Loan. Speaking to Moneybox, the mother of two said: “I think it’s a really good way to borrow and save, especially for people with more than one child. It’s hard to save up for Christmas and as they get older their presents get more expensive. Before I did try a door-to-door loan, but the interest that you’re paying back is sky high with them.”
1st Alliance (Ayrshire) Credit Union has also seen an increase in demand for its Child Benefit Loan. “In 2015/16 we had 200 of our members paying in Child Benefit. Fast forward to 2018/2019 and it has grown to 302,” says 1st Alliance’s, Senior Member Officer, Amanda McLaughlin.
In total 1st Alliance members’ have taken out 830 loans, borrowing just over £420,000. Compared with doorstep lenders, they’ve saved over £310,000 in interest. “This is something we are proud of and proves the credit union is an important asset to the community. A total of £312,370 has been saved in the local economy and has helped our members cope with the cost of day-to-day expenses.” Amanda added.
Matt Bland told Moneybox listeners the loans are typically small and repaid quickly, meaning just a small amount of interest is paid. “More credit unions are actively offering this because it’s an innovation that’s working for people and works with the benefits they receive.” Matt added: “It helps low-income families smooth the lumpy costs of things like Christmas and back to school.”
You can listen back to the discussion on the BBC Radio 4 website here.
Source BBC News