Quids-In Project: Summary
Background
Croydon, Merton & Sutton Credit Union (CMS CU Ltd) is the local credit union for South Norwood ward, SE25. The credit union has been awarded funding by the Community First South Norwood Panel to tackle poverty and debt in local families.
To do this the credit union has agreed to set up a local project address the high dependence on payday loan companies, doorstep lenders and loan sharks in South Norwood. which will help local people manage their money better through taking advantage of the savings and loans available from the credit union rather than more expensive loan options available in the high street, online and by TV, text and phone. The Quids-in Project will run for 6 months.
Local volunteer Ambassadors
The credit union will recruit a team of SE25 residents as local volunteer Ambassadors. They will help to deliver a planned programme ofsessions (The Quids-in Road show) in community and business locations in SE25. Ambassadors will gain training in presentation skills, customer service and public speaking. Volunteers will be provided with all the necessary leaflets, contact details, forms and resources required to run the road show. They will be entitled to claim travel expenses to and from the road show location and the credit union office.
The Quids-in Roadshow
A team of 10 volunteer Ambassadors will assist with 20 road show sessions in South Norwood venues over a six month period. Each session will last approximately 2.5 hours. 2 of these events will be presentations to employees in a local business. The road show will promote the credit union as a safe, secure, accessible and professional alternative to high-interest money lenders. Ambassadors will talk to local people in the road show locations. They will highlight the benefits of joining the credit union and opening a savings account; which will also give access to affordable credit through a low interest saver loan.The road show will also be supported by the England Illegal Money-lending team to provide residents and workers with free information and advice in dealing with loan sharks.
Quids-inAmbassadors will encourage people to join the credit union, start a monthly savings plan, open a Christmas savings account and consider a low-cost loan application. As part of the project every new member will be offered a free personal savings or loans plan interview to help them with their long-term money management.
Why is this project necessary?
South Norwood ward is a key area of deprivation. The past 12 months has seen a significant increase in the presence of high-interest payday lenders, pawn shops and betting shops as the trend for more residents to access additional funds quickly (including payday and doorstep loans) to cover everyday bills, rent and living costs continues. This trend is likely to continue as residents feel the impact of the government welfare reforms and benefit changes in 2013/14.
The credit union knows from our current membership and customer base that many families approach these companies as a quick-fix solution to an immediate crisis and do not anticipate the long-term consequences of high interest charges, late payment penalties and additional fees. Far from being a short-term solution, the crisis loan then becomes a constant weekly or monthly burden which takes priority over basic necessities such as food and clothing (and in some cases rent).
How will the credit union help?
By encouraging local people to open a credit union account and to save a small amount regularly the project will address poverty. It will help local families to build up a savings cushion and become more financially secure. This will in turn make them less financially vulnerable and less likely to need to turn to high interest lenders for crisis loans which often lead to unsustainable and unmanageable debt.
By borrowing from the credit union as an ethical co-operative, rather than other less ethical high interest lenders such as payday loan companies, doorstep or online lenders and illegal loan sharks; local people will pay less interest and keep more of their own money in their pocket to support their families.
The CMSCU saver loan currently only charges 1.5% interest pre month (19.6% APR) on the reducing balance. This is affordable and considerably less than other options available to many financially excluded and vulnerable families who don’t have good credit ratings or access to mainstream banking facilities. As part of the loan agreement members also agree to save at least £25 per month whilst paying back their loan. This means that the member pays back their loan at a rate that they can afford and builds up a savings balance at the same time. The credit union saver loan helps end the cycle of reliance on short-term unaffordable crisis loans and unmanageable debt that leads to deeper poverty and hardship.
Making a difference – Project outcomes
Ambassadors will help local people to benefit from the Quids-In project in the following ways:
•200 local people will learn about the credit (output 1)
•80 local people will join the credit union and open a savings account (output 2)
•20 local families will open a credit union Christmas savings account (output 3)
•200 people will learn about the credit union as a realistic alternative to high-interest lenders for affordable credit and receive information on dealing with loan sharks (output 4)
•25 new members will receive a personal savings and/ or loan plan (output 5)
•20 parents will apply for a credit union loan (output 6)
•10 new members will switch from a payday/ doorstep loan to a credit union loan (output 7)
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Project contact: Helen Mason, Operations Manager, M: 07579 009017, E: