July 1, 2008
Government relaxes Credit Union rules
The government has unveiled plans to ease the rules around credit unions in order to make it easier for workers who are on low incomes to gain access to loans. The move will allow these organizations to offer financial alternatives to the traditional financial sector firms. It is also hoped that this will combat the rise in door step and pay day loans that usually sees the borrower face exorbitant interest rates. Credit union interest rates are usually set at 1% per month and do not exceed 2% .
Credit union members normally live or work within the same area. The government aims to broaden the appeal of these credit organizations by ensuring that membership is no longer dependant on geographical factors.
The UK currently has over 500 Credit Unions with a combined membership of around 500,000. However there could be a marked increase after the government’s planned rule relaxation.