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More families resorting to loans to pay bills amid cost-of-living crisis, says credit union head


Rising costs have seen people seek financial support

Rising costs have seen people seek financial support


Rising costs have seen people seek financial support

Families are having to take out small loans to cover essentials such as food, car tax and utility bills as they struggle to survive the rising cost of living, the head of a credit union has said.

Julie-Ann McStravick of Newington Credit Union in north Belfast, which has 25,000 adult members, said it was trying to help people who had already done “everything to help themselves” by making cuts to their spending such as sacrificing holidays.

She said it wasn’t just people on benefits who were deeply worried about their finances. “We are seeing people who would have considered themselves to be comfortable now finding it quite tight.”

Inflation has now reached 9.4%, reflecting the soaring costs of everything from food to fuel, gas to electricity.

She said: “Our average loan used to be £1,200 to £1,500. But what we’re seeing at the minute are a lot of loans of maybe £100, £300 or £400 for home needs or personal needs, like paying bills.

“We’re also seeing people coming in and even getting a loan for their car tax, to pay for a year instead of paying monthly. They find that their monthly repayment to us would be slightly lower than what they’re paying to the DVLA every month.

“We’re also seeing people with loans coming now to say they need help with their monthly loan repayments, as their monthly expenses are going up.”

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She added: “We also have an increase in the number of people looking for debt consolidation loans, where we take on the debt if they tell us the debt they want to clear. They would take the loan with us, like any loan application, and we would pay those companies what they are owed directly.”

Julie-Ann said that July is normally Newington Credit Union’s biggest month for holiday loans, but that there had been a significant fall this year, with families not wanting to incur the expense.

She too said parents were also struggling with additional costs during the school holidays and were having to take unpaid leave in some cases to look after their children.

“July would have been our biggest month for holiday loans but they’re significantly down this year.

“We have had members coming in saying to us that their electricity bills have tripled in the past six months, and the same with their oil and the gas. It’s those extra burdens that are now making those things they normally spend money on be a worry.

“I feel like this is almost worse than Covid for people’s finances. Although Covid was unpredictable, people knew that the furlough scheme was there, their outgoings weren’t changing, their benefits weren’t changing and their income could be managed.

“But now, with utility companies upping their prices what seems like every other week, it’s so unpredictable. That’s the worrying part of it for people. It’s the unpredictable nature of it because you can’t plan for anything. You don’t know if tomorrow they’re going to issue another increase.”

Julie-Ann said parents were already starting to borrow small amounts to cover the cost of uniforms for the return to school and, in some cases, were accessing their children’s accounts to make withdrawals for back-to-school costs. Withdrawals from juvenile accounts are allowed when they’re to benefit the child.

She added: “People do feel they are doing as much as they possibly can to ensure they are financially stable, but unfortunately it’s things that are outside their control.

“You can’t just say, ‘I’m not going to pay my gas or disconnect my gas.’ It’s not the same thing as saying you’re going to reduce your TV package, which is a short-term solution.

“There needs to be a bigger exercise done in how we can help people longer-term if utility prices and petrol prices stay where they are.

“We are asking: how do we help people who are doing everything they possibly can to help themselves?”

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