EVERYONE at some time or another is faced with an unexpected expense, whether it is to replace a broken fridge, pay an energy bill, repair the car, buy new school uniforms or travel somewhere in an emergency.
Not all of us have savings to call upon and it is easy to fall into the trap of maxing out expensive credit cards or payday loans, where interest repayments can lead to crippling debt. And with up to a third of the UK population without a bank account, there are few other options.
That’s where community banks can help. Credit unions, another name for community banks, are owned by their members and run on their behalf.
They provide affordable loans for people who are unable to get credit elsewhere to prevent them from going to payday loan companies or loan sharks. Members open savings accounts and, provided they meet loan criteria, can take out loans which are repaid monthly.
Two credit unions working in Wiltshire are Acorn Community Bank, which covers Swindon and Wiltshire, and the Great Western Credit Union, which operates in Somerset and Bath, as well as Swindon and Wiltshire.
Acorn now has 10,000 members and in 2023/24 loaned more than £2.3 million to its members.
CEO Clive Henly says: “A third of the population of this country don't have full access to a bank,” said Mr Henly. “So it's very easy for people to go to a high interest lender or at worst a loan shark, and we want to be there for them so they have a reliable financial partner to look to.”
Credit unions are fully legal and regulated by the Financial Conduct Authority, which means your money is safe and secure.
Acorn Community Bank works with England’s Illegal Money Lending Team to report loan sharks who prey on people in desperate financial circumstances.
The term loan shark can apply to anyone who lends money informally. It could even be someone at work who overhears a conversation about money worries and offers to lend it. They do so with no formal agreement about how much will be repaid and some can use intimidation or violence to get back what they say they are owed.
Find out how to spot a loan shark in this short film. Find out more about the warning signs, how you can help yourself or someone else if you’re worried about a loan shark on the Stop Loan Sharks website.
Find out more about Acorn Community Bank here or Great Western Credit Union here.