TRALEE & KILLARNEY CREDIT UNIONS LAUNCHES PILOT PERSONAL MICRO CREDIT PROJECT
SMALL AFFORDABLE LOANS TO BE MADE AVAILABLE TO THE THOSE ON SOCIAL WELFARE IN NORTH & SOUTH KERRY
SCHEME IS A DRIVE TO COMBAT MONEYLENDERS
17th November 2015
Tralee & Killarney Credit Union has today jointly announced the launch of a new Personal Micro Credit Project (PMC) which will be initially piloted in Tralee and Killarney area and in over 30 other credit unions across the country.
The project will be run in partnership with the Department of Social Protection, the Citizens Information Board, the Social Finance Foundation and An Post and is open to social welfare recipients. Those who would like to avail of this type of loan will need to join Tralee & Killarney Credit Union (if they are not already a member) and sign up for repayments to be made to the loan via the Household Budget Scheme which is run by An Post.
Speaking about the initiative Mark Murphy, CEO, of Killarney Credit Union said:
“We are delighted to take part in this pilot scheme. We are all well aware of the penal interest rates charged by moneylenders, both legal and illegal, in local communities. This pilot scheme will highlight that the credit union is a real option for people who are on social welfare in our area”.
Fintan Ryan, CEO, of Tralee Credit Union added
“The target audience for the scheme are those who are excluded from mainstream credit. Essentially, the aim is to offer small loans to those using or considering using a moneylending service. The project is working to create a realistic offering to counter the ‘convenience and ease’ advantage that moneylenders have in this country. An eligible person can apply for a loan of between €100 and €2,000. This type of loan will be distinct from a standard credit union loan” he concluded.
The Central Bank estimates that about 360,000 (2013 Report on Licensed Moneylending Industry) people are using moneylending services in the Republic of Ireland. This does not take into account those using unlicensed operators. Interest charged on loans from moneylenders can be 290% or even higher. The maximum interest rate which credit unions can charge is 12% (12.68% APR).
Credit unions have been particularly vocal throughout the recession years about the dangers of using moneylending services as in many cases, those who avail of this type of credit are getting trapped in a cycle of debt which is very hard to break free from.
Information on the pilot scheme will be available in Money Advice and Budgeting Services (MABS) and St. Vincent de Paul (SVP) offices which are in the vicinity of the participating credit unions.
Commenting on the initiative, John-Mark McCafferty, Head of Social Justice with the Society of St. Vincent de Paul, said:
“We have been advocating for an alternative to high cost moneylenders for some time and we warmly welcome the leadership shown by credit unions in the pilot to provide this product for people on social welfare who are eligible. We are working with our credit union colleagues locally throughout the pilot sites in order to ensure take-up of the scheme and more affordable credit for the households we assist”.
Notes to Editor
* The Household Budget Scheme operated by An Post is a scheme that helps those getting certain social welfare payments to spread the cost of some household bills over the year. Under the scheme, people who receive certain social welfare payments can pay regular amounts towards various household utility bills by direct deduction from their weekly payment. The customer can choose to have any amount deducted from their weekly payment subject to:
- a weekly minimum of €5 for each utility bill type, and
- the total payment must not exceed 25% of their weekly payment
For the PMC project, it is now being broadened to enable funds to be used to make repayments for a specific type of credit union loan.
The origins of the Personal Micro Credit Project date back to 2013 when discussions took place between the Citizens Information Board, MABS and the Social Finance Foundation (SSF) on the burgeoning moneylending industry in Ireland. A draft report was produced and sent to the Minister for Social Protection recommending that the introduction of a PMC scheme operated by credit unions, as an alternative to the moneylending industry.
A list of participating credit unions is available at https://www.facebook.com/itmakessenseloan