The South Yorkshire Credit Union currently has three shops in Barnsley and Doncaster
It's a boom time for Credit Unions. As some people turn to loan sharks for a financial boost, there are alternatives to help people struggling during the economic downturn.
But what are Credit Unions? They are not-for-profit community co-operatives providing savings and loans, controlled by their members and regulated by the Financial Services Authority.
Gail Foster from South Yorkshire Credit Union Association (SYCUA) based in Goldthorpe helps people on low incomes avoid having to go to extreme circumstances to borrow money, such as a loan shark. The SYCUA has tripled its members throughout 2009, signing up 2,000 new members. The Credit Union gave 6,500 loans which estimate at £2.5 million.
Gail's father originally set up the Credit Union in a bedroom 1980s and has seen it grow from strength to strength and now has premises across Barnsley and Doncaster.
Gail's father originally set up the Credit Union in a bedroom 10 years ago. It went from strength to strength and now has premises across Barnsley and Doncaster.
"As you can imagine when it began there were only a handful of members but now we are into our thousands," says Gail. "A lot of people are saving money on charges, as opposed to using door step lenders or loan sharks."
The three shops are manned by 16 staff and are getting busier during the economic crisis
So why do people use a Credit Union? One woman from Goldthorpe explained how she turned to the SYCUA after being refused a bank account: "If it wasn't for a Credit Union I couldn't have a bank account and then I wouldn't be able to get my benefits."
Another man, who wanted to remain anonymous, said: "It can get really busy - it's very popular. I'm here trying to get a loan because my cooker blew up, otherwise I'd have a house with three children and no food. Around here [Goldthorpe] the loan sharks are pretty bad and their interest rates are crazy. The Credit Union is just a God send for us."
The Credit Union not only provides loans to their members, but importantly it offers advice on ways to manage money. An advisor not only speaks to people face-to-face but the SYCUA has also seen a sharp rise in enquires over the telephone.
"Everybody should be entitled to a bank account and be given advice on how to run a bank account or help them save money - it should be the norm," says Gail. "We are dealing with everybody's problems, the demand for the telephones has risen and we are struggling to stay on top of that."
It is not just people with debt problems who use Goldthorpe's Credit Union, but they also offer low interest rates on loans - currently (March 2010) around 25.36% APR.
The SYCUA runs saving clubs for children in 26 primary schools across South Yorkshire, educating them on money management. Not only do the children benefit from the programme, but also the parents. Interest in primary schools has grown through word of mouth and SYCUA now plans to speak to pupils at secondary schools.
The SYCUA will be opening two new offices in Wombwell and Denaby Main in April 2010.