KSPI 1 - Responsible Money Management
"I was taking out payday loans as an only source of borrowing money due to my bad credit history, but the credit union has helped get me out of the cycle of extremely high interest payments."
London Capital Credit Union (LCCU) strives to design its services and products to meet the needs of all people, regardless of their background. Their services continue to be of greatest help to those most often excluded from mainstream financial services. These are typically lone parents, people with long term health issues, having been made redundant, or having gone through a personal crisis such as divorce/separation.
A number of years ago, three financial analysts from a leading City banking institution made an assessment of the social and financial impact of London Capital Credit Union's lending business. They researched all of their first-time borrowers over the preceding three months, and analysed where they had previously been borrowing and at what cost. From this they were then able to determine that for every £1 a member saves, and that LCCU then lends to displace existing high cost debt, members will save on average £1.25 each year in interests, bank charges and fees.
During 2017-18 LCCU used member's savings to issue loans to the value of £7,057,000 to members. Based on the above formula they are estimated to have saved over £8,821,000 in interest by transferring high cost debts to the credit union. Over the next 5 years LCCU forecasts a financial benefit from its activities to members, and the wider community, in excess of £129 million.