Breaking the Cycle of Debt

The pressure of expectation at Christmas can be stifling – from the desire to have that ‘perfect’ day, to the ever increasing demands of children bombarded with relentless advertising.

Add to the mix the difficult economic situation over the past few years – when many families have been struggling financially even if they have jobs – and it is not surprising that many people are spending beyond their means.

The cost of household debt keeps rising across the UK. And, for those shunned by the high street banks, this can often mean turning to high-cost, ‘pay day’ lenders. With the extortionate interest that these and other short-term lenders charge, they are no more than legal loan sharks.

Once in that cycle of repetitive borrowing, it can be very difficult to break free. It is this borrowing-trap that loan companies rely on to make obscene profits from some of the poorest people in society. The government has failed to introduce tougher regulation on these companies – despite the biggest cost of living crisis in a generation.

I would urge people to look at the South Yorkshire Credit Union instead. It exists to provide help with affordable loans and accessible savings; its aim is to provide an alternative to high-cost credit. It will also help anyone who is struggling to manage their budget, with practical advice.

Traditionally, credit unions are small, non-profit, financial organisations set up by members with something in common to benefit their community.  They exist to provide a financial community where the members mutually benefit; there is no profit for third-party shareholders.

They offer a lifeline to those people who can’t access ordinary bank products, and are a great alternative to payday loans or doorstep lending. They also appeal to those who want to bank ethically and benefit their community. Sometimes their products can event beat those of mainstream banks.

That’s why Labour, if elected in 2015, would raise £20m a year from pay day lenders through a tax or levy. This money would then be used to expand credit unions, so that they can help even more people in our communities.


South Yorkshire credit union has offices in Barnsley and across South Yorkshire.
www.sycu.co.uk

This article was first published in the Barnsley Independent on 8 January 2014.