The poor are always the first to be turned away by major lenders.
And despite needing to borrow smaller sums of money, they pay over the odds.
Poor families may need to borrow only £300 at any time - to pay for next term's school uniforms, say.
But because of their low credit rating they often have to turn to doorstep lenders that charge 10 times more than the banks.
Provident Personal Credit, for example, charges a typical 183 per cent for a £300 loan repaid with £9 instalments over 56 weeks. The total repayment is £504, of which £204 is interest.
But there are alternatives. The same loan from a credit union would cost only £40 interest to repay.
There are nearly 346 of these self-help clubs nationwide that take deposits from and lend to 490,000 members.
Among their members is Jane, a 45-year-old single mum, who used to borrow from doorstep lenders.
Now she gets loans from her local Bristol credit union instead.
When she borrowed £430 it cost just £57 in interest. Her previous doorstep lender would have charged £292.
The Government wants to help credit unions by giving them more freedom to lend and attract customers. Treasury Secretary Kitty Ussher said "Now more than ever, given families are feeling the pinch, we want to make it easier to access the affordable credit offered by credit unions, rather than having to turn to more expensive schemes or even illegal loan sharks."
At present the rules require credit union members to share a common bond such as where they live or work. Some cover airline staff, cabbies, policemen or even small businesses.
Source: http://www.mirror.co.uk/news/money/mirrormoney/2008/07/09/ | 
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