Micro-Credit initiative will end crippling Interest Rates of Money Lenders – Mitchell
Sinn Féin TD for Dublin Bay North Denise Mitchell has welcomed a new micro-credit initiative the Irish League of Credit Unions which has gone nationwide this week. It will provide for smaller loans with an average payment of €500 and with reasonable and affordable interest rates. However the new loan scheme highlights the crippling interest rates of money lender that are active in the market.
Deputy Mitchell said:
“This a very welcome initiative from the Irish League of Credit Unions but it has highlighted that people have had to resort to interest rates of up to nearly 200% from money lenders.
“According to the Irish League of Credit Unions, the initial roll out of the project had shown great success, delivering a realistic alternative for people and membership of a Credit Union is not required to seek a loan. It will ultimately be up to each credit union individually to join the programme.
“However, this does not eliminate the current money lenders. People may still have difficulty for a variety of reasons approaching any institutional body and feel more comfortable with the money lender at the door. This will however mean facing crippling interest payments for the convenience.
“Other countries across the European Union place a cap on interest rates and many are at substantially lower levels than in Ireland.
“With the extra payments, through the high interest rates, it is estimated that €93m is being taken from often vulnerable people who cannot afford it. The Irish League of Credit Unions judge this figure against loans of 2 x €500 in a year.
“Thankfully people now have an affordable avenue created by the Credit Unions. But the high interest rates of other groups will remain. These high interest rates can be addressed by the Government and through Central Bank regulations. It is better that money is kept in the pockets of often the most vulnerable than being drained away in crippling interest.”