by James Sherrard
The Dean of Hammersmith and Fulham Diocese is taking a lead from the Archbishop of Canterbury by raising awareness of credit unions.
Canon Guy Wilkinson, of St Andrew’s Church, Barons Court, said it was much safer for people to borrow money from credit unions, which have interest rates of around 25 per cent, rather than payday lenders whose rates can be as much as 500 per cent.
It comes as politicians call for tighter controls on controversial loan companies, such as Wonga, who are accused of taking advantage of hard-up families.
A £1,000 loan from London Plus Credit Union would cost someone just £22.33 a month in interest. In contrast, a customer would have to fork out £127.15 in interest and fees to borrow £400 from Wonga for 30 days.
Mr Wilkinson spoke at an awareness event last week at at St John’s Vicarage, Fulham.
“We don’t want people to get caught up with these payday loans and paying 500 per cent interest,” he said.
“It’s crazy and yet people are desperate and don’t know the alternatives.
“What we are trying to do is to make people aware that there are much safer and better alternatives which will not put them in that kind of way just because, perfectly ordinarily, they’re a bit short at the end of the month.”
Mr Wilkinson also promoted an ethical charity bond that has been set up in conjunction with London Plus, a not-for-profit group which launched in Hammersmith and Fulham five years ago.
This bond allows people to house their savings in a place where any interest goes back into the community. Becoming a member and depositing money, means the union can treble the amount of cash it can lend to others.
London Plus chief executive Cheryl Gale said: “We try to help the people in our community that tend to be overlooked by banks. We will never knowingly place someone in debt that they can not afford.
“We do not look at short term fixes that lead to longer term financial pressure, but instead offer an all round solution.”
Richard Griffiths, from the Consumer Finance Association which represents companies including QuickQuid and Cash Converters, said there is room for both credit unions and payday loan companies in the financial market.
“We are a trades union who represent responsible major companies. Payday loans provide a really good service for lots of people in this day and age,” said Mr Griffiths.
“They are a different service to credit unions who provide money more quickly and for different needs. People have got to borrow responsibly and look for lenders which lend responsibly.”
Wonga declined to comment.
