Story by Helen Warburton
In October 2004, many households in Burngreave received the BrightHouse catalogue through their door with the slogan “making Christmas affordable” on the front. BrightHouse, formerly known as Crazy George’s, sell electrical goods, household appliances and furniture on credit.
A lot of people in Burngreave don’t have access to credit through bank accounts. If you can’t pay cash up front or get credit elsewhere, making small weekly payments can look attractive. BrightHouse, Provident (the Provy), Shopacheck and others like them know this, which is why they target areas like ours.
As I need a new washing machine I checked out how BrightHouse could make a new washer an affordable Christmas present from me to me and was not impressed to find it could cost me £1,000 (see below).
BrightHouse cash price of a Whirlpool washer: £421.54
If payments are spread over 3 years, with interest: £606.84
Add “optional” service cover (extra £2.10 per week): £327.60
Add insurance at 15%: £65.00
Total: £999.44
And if you miss a payment or want to settle the debt early, there are penalty charges whacked on top.
There is currently no legal limit on the amount that ‘predatory lenders’ can charge in interest. The National Consumer Council found that on average they charge 177% interest, with some charging as much as 900%!
There is another way!
Credit unions are not allowed to charge more than 12% annual interest. This means that with a credit union loan you could buy the same Whirlpool washer from Comet (list price £340) and repay it over 3 years at £2.60 per week – total cost £403. If you pay it off sooner it will cost you less.
We have a great Credit Union in Pitsmoor which has been running for almost 10 years. Its members have a total of £60,000 saved, of which £40,000 is out on loan. This keeps local residents’ money circulating within the community, and allows them to plan for big purchases, holidays and Christmas, knowing that they won’t get hit with hidden charges and pulled into spiralling debt.
So why aren’t more of us in the credit union? A spokesperson said: “Up to a year ago the credit union was run entirely by volunteers, but now we have two part-time workers and an office, paid from a BNDfC grant, and this has made a real difference. New members are joining all the time and are delighted with the service they get. But we won’t be putting predatory lenders out of business until we are as convenient and accessible as they are. The more members and volunteers who join us, the sooner that time will come.”
There are no credit checks, you just need to save regularly over a period of time before taking out a loan, so that the credit union can see what level of loan repayments you can afford.
Join Pitsmoor Credit Union now and help make next Christmas more affordable for more people in Burngreave.
Credit Unions will not usually make loans to pay off expensive lenders like BrightHouse, but if you are struggling to meet loan or debt repayments, you can get help by calling in to Pitsmoor Citizens’ Advice Bureau on Spital Hill and seeing their debt advisor.