Belts have been tightened at the credit unions. . . but it's not all doom and gloom
We knew the banks were up to their necks in debt but we somehow thought credit unions were different. But the Central Bank has restricted the lending operations of many of the country's 409 credit unions, leaving members worried about borrowing for college fees, Christmas or even paying off the credit card.
In today's column we separate fact from fiction and find out whether credit unions, a lifeline in many communities, are still open for business. Our table shows that they are, so you shouldn't be afraid to go in and ask if you need a loan.
Over 700,000 people use credit unions for saving, organising their household budget and borrowing. The problem is that some simply loaned too much. Others invested in property which went belly-up. Some are finding that their level of bad debts is unsustainable. In other words, they're more like the banks than you might think.
This means they're scrutinising borrowers with a closer eye. A spokesperson for the Irish League of Credit Unions told me that despite news of restrictions in lending, "the vast majority of credit unions have sufficient funds available to lend to members once an evaluation of their ability to repay has been completed".
They are anxious to put people off going to expensive, and/or illegal moneylenders -- a view this column strongly shares.
"In this difficult financial climate people are most susceptible to the easy-money promises of moneylenders. The less well-off and less financially-aware are most at risk. We want people to know that credit unions are on their side and want to help," said the spokesman.
All credit unions stress members' ability to repay loans is paramount, but if you are in genuine need and can afford one, loans are available. Interest rates are typically lower than a bank.
Those in need should also contact MABS (www.mabs.ie) or the St Vincent de Paul, both of whom work closely with credit unions.