Downturn sparks credit union rush

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Downturn sparks credit union rush

Nov 23, 2008

Credit unions in South Yorkshire have reported they are struggling to cope with a surge in demand for loans as the weak economy hits low income families.

In Barnsley, the credit union loaned £700,000 in the year to October 2007. That has doubled to £1.4m this year.

At the Sheffield branch, the value of loans handled has jumped almost fivefold from £300,000 when it was formed in 2005 to £1.25m last year.

It could have given more loans but does not have enough staff to process them.

Credit unions are small-scale savings and loan co-operatives that typically serve people on low incomes to help them avoid the crippling interest rates offered by loan sharks.

The Goldthorpe branch in Barnsley said it was currently giving about three times as many loans in the run-up to Christmas as it did at the same time last year.

The Sheffield Credit Union said so many people were using its services that it did not have enough staff to process all their applications.

Chief executive Eric Thompson said: "Undoubtedly, the current economic situation has made people turn to credit unions where they maybe would not have previously.

"There is an urgent need for more resources to come into this sector to increase our capacity."

Factory closure

In the Dearne Valley, credit union staff said demand was even busier than when it was formed to help ex-miners cope with the aftermath of pit closures in the early 1980s.

The recent closure of double-glazing manufacturer Speed Frame in Goldthorpe, with the loss of 300 local jobs, has been a major factor behind the rising demand for cheaper loans.

Gail Foster, a supervisor at the Goldthorpe branch of the Barnsley Credit Union, said: "We are very busy from the minute we open the doors at 10 o'clock in the morning until we close at four o'clock.

"The past three months have been extremely busy in comparison to this time last year.

"Bills are getting higher but their income isn't - people are struggling."

Source: BBC

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