Are You A GRINCH And Needing To Borrow Money For Christmas?
Published: 26 October 2010 By MoneyHighStreet Staff 1 Comment
The Co-operative Group has identified a group as GRINCHs who it says will be feeling under pressure to borrow in order to finance Christmas, are you a GRINCH?
According to Co-operative Electrical, the under 35′s are a Generation Recognised In Need of Credit Help (GRINCH) and could be trying to borrow money that could cause them more pain than gain over the festive period – with the worry of debt problems hitting hard should they be unable to repay the money borrowed.
Their findings show that 24-35 year olds are more than twice as likely to have been declined a loan or overdraft and worryingly mover than half are unaware of the Annual Percentage Rate (APR) charged on their borrowings.
Many would turn to credit cards if a loan or overdrafter was declined, with some turning to payday loans or unauthorised doorstep lenders. An alternative option, credit unions are used by less than 1%.
The Co-operative Electrical is developing a unique scheme with credit unions to offer an alternative to high interest or unauthorised lenders for families without access to mainstream credit.
David Sanderson of the Co-op said “More and more people are feeling under financial pressure and put themselves at risk of paying a high price by not fully understanding the cost of finance or the alternatives available.
Credit unions reach into communities and give members access to a fair, ethical and affordable alternative to the high interest lenders who prey on those financially vulnerable.”
Credit Unions are financial services businesses, regulated by the Financial Services Authority (FSA) and owned and run by their members to provide communities with access to: easy ways to save, affordable loans, fair and straightforward bank accounts; and a range of other useful services to promote good money management and equip people with the skills and knowledge to be effective and responsible users of financial services.
I agree with David Sanderson that many people are not aware of the alternatives to expensive forms of finance when a bank loan is declined. In some situations, for example helping to raise short term finance over the festive period, a pawnbroker can be a good alternative.
Clearly the APR is such that pawnbrokers are not a viable long term solution. However over a shorter period, for example needing cash now for Christmas but having guaranteed and regular money coming in in the New Year, borrowing against a valuable asset such as jewellery or fine art can be a quick and easy solution.