Salaryflex scheme a success for London Mutual Credit Union
As a credit union, London Mutual Credit Union (LMCU), like many others, is facing the challenge of how to maintain lending in a way that is responsible.
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Wednesday 17 January 2024
As a credit union, London Mutual Credit Union (LMCU), like many others, is facing the challenge of how to maintain lending in a way that is responsible.
A few months back, the Credit Union introduced its ‘ Salaryflex’ product designed to fill a gap in its product range for members who are in secure employment, but who have limited financial resilience. These individuals usually have some disposable income, but regularly use credit cards or overdrafts to spread larger one-off costs, and have limited savings. “The majority of our salary deduction members work in the public sector. While most have not seen their employment disrupted, many have nonetheless faced unexpected expenses and additional costs because of the shut-down,” says Head of Business Development at LMCU, Ben West.
Ben added: “At the early stages of the crisis, we also heard from many members who hadn’t been directly financially affected, but who felt anxious about their financial prospects, and their ability to deal with unforeseen expenses. In some cases, individuals were cancelling their salary deduction, or withdrawing their savings to ensure they had enough spare cash.”
The purpose of the product is to encourage salary deduction members to save regularly with London Mutual, helping to build their financial resilience. In return for agreeing to save a regular amount (between £30-£120 a month), Salaryflex members are able to access a line of credit of up to £2,000 for when they need it. This line of credit is designed to replace existing overdrafts and credit cards, and gives member confidence that they can access a pre-approved line of credit to spread one-off larger costs, while building savings which, over time, will reduce their dependence on borrowing.
The salary deduction is taken each month, regardless of whether the member uses their credit limit or not. This makes budgeting for repayments straightforward and predictable. It also means that when the member isn’t borrowing, they are either building savings or paying the balance off.
With almost £100,000 worth of lending in 3 weeks, the new scheme has proven popular among members. If you work for one of LMCU’S 25+ salary deduction partners, you can apply for SalaryFlex which includes an interest-free offer for NHS employees. Ben continued: “Over 2,000 of our members work in the NHS, and we know that with many working harder than ever, some will appreciate the flexibility this product provides. . Because of that, we are proud to be offering Salaryflex to our members working in the NHS for 3 months, interest-free”
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