Beware the dangers of Christmas debt – Larne Credit Union urges

The festive shopping season is now in full swing, but many local people will be feeling the pinch as they struggle to afford gifts for friends and loved ones this Christmas.

And this may be further compounded by colder weather closing in, pushing up people’s fuel and energy bills and putting an extra strain on their finances.

The Northern Ireland Household Income Tracker, recently published by the Irish League of Credit Unions, revealed the challenges facing households across the province in terms of dwindling disposable income and trying to cope with increases in energy costs and household bills.

And the figures also show an increase in the number of people turning to payday loan companies and moneylenders in a bid to make ends meet.

Billy Breen, secretary of Larne Credit Union said the figures in the report are “more or less reflective” of the current situation for many Larne residents.

He told the Times: “In these difficult economic times, more and more people are being forced to tighten their belts and cut down on their spending; rather than going on holidays to Spain every year, people tend to vacation closer to home or not go anywhere at all in many cases.

“The NI Household Income Tracker showed that disposable income has fallen over the past year, with eight per cent of consumers now saying they have nothing left at the end of the month once essential bills are paid, and worryingly for many their income does not even cover their essential bills each month.

“Almost half of all adults in NI are unable to save, and nine out of ten consumers say that they have to switch off heating during cold periods to save fuel. As a probable result of decreasing incomes, unemployment and increases in energy bills, nine per cent of consumers have been forced to take out a loan to meet their fuel bills.

“But what worries me the most is that 17 per cent have borrowed from a moneylender and 14 per cent from a pay day loan company to cover this cost.”

Mr Breen said it was vital that people know exactly what they are getting into when it comes to taking out pay day loans, particularly because of the “dizzyingly high interest rates many of them charge”.

He added: “Legally there is no cap on the level of interest rates these firms can charge; some have been known to have an APR of more than 4000 per cent. This means that the repayments on relatively small loans can quickly spiral out of control if you are not careful.

“While we at the Credit Union realise that sometimes people just can’t avoid getting themselves into debt, we would strongly urge those considering turning to moneylenders or pay day loan companies to make sure they thoroughly read the small print first.

“Before taking out a loan, people should make sure that they are able to meet the repayments. If the reason for the loan is because money is owed on a credit card, rent or mortgage, they should try talking to the creditor, landlord or lender first. They may come to an arrangement which makes the pay day loan unnecessary.

“I would also urge anyone in Larne facing hardship with bills to pay to come and speak to us at the Credit Union before getting caught up in a vicious spiral of debt,” Mr Breen concluded.