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Hull & East Yorkshire Credit Union helping locals avoid high-interest traps during cost-of-living crisis

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An organisation which is now in its 24th year of providing a loans and savings lifeline for families says people in Hull and the Humber region are changing the way they borrow in the face of the cost of living crisis.

John Smith, Governance Officer of HEY Credit Union, said their annual report for 2022 showed a big increase in the number of members taking out loans with the not-for-profit mutual over the past year.

While the Credit Union can issue loans from £100 up to £20,000, depending on members’ affordability, many more of the loans issued in recent months have been for smaller purchases – including day to day living costs.

John said: “Members are generally finding the cost of living crisis very challenging. They are applying for more loans than ever before – we were up by 25 per cent over 2021 – and they are applying more often. 

John also gave a warning about the activities of high interest lenders, who prey on hard-pressed families by tying them into unaffordable debts.

He said: “Once they get locked into high cost credit, whether it’s with doorstep lenders, payday credit, or unregulated loan sharks, it can be hard to break the cycle of problem debt.

“It has become a big problem over the last ten years, with the growth of online services. There are even companies who promote themselves online and on social media and tell people they can clear their debts. They make a lot of money from fees but the debt is only reduced marginally.

“We want to encourage people in the Humber Region to take a look at us first. Often we can save them a lot of money when borrowing, whether it’s to spread the cost of a big ticket item or simply to smooth out the lumpy costs of living.” 

HEY Credit Union now has more than 15,000 adult members and junior savers. As well as a head office in Hull and online, there are branches in Beverley, Bridlington, Driffield, Goole, Grimsby, Scunthorpe and Withernsea, where people can walk in and talk with their local team.

The Credit Union’s assets increased by more than £800,000 during 2022 to stand at £16.5 million, with members’ savings accounting for £14 million of that.

John explained that HEY Credit Union had not increased its interest rates on loans. He said: “They are going up elsewhere but we have kept ours the same. We are not under any pressure to increase our rates because as a not-for-profit lender we only need to cover our costs.

“We have cost pressures in other areas like all businesses just now, but we don’t plan to increase our interest charges because that would just put more stress on people and cause them to go to other places that might not look after them in the same way.”  

Just before Christmas the Credit Union paid out over £135,000 in Dividends to its members as a reward for saving with it through the year. John said: “We are living proof of the benefits of co-operative trading – our surplus is returned to the members whose saving and borrowing helped to create it, and it recycles within the regional economy. It’s all being used for the benefit of the region where our member-customers live and work.”

Established products include the Christmas Saver account, which locks members’ funds safely out of temptation’s way until November. In 2022 it amassed a total of £907,000. The other big-spending time of the year for many families is the summer.

John said: “That’s when people buy school uniforms. They’re getting more and more expensive because so many of the items are branded. We can help with small affordable loans repaid direct from Child Benefit.”

Members can save directly with the Credit Union and over 3,000 of them make regular contributions via their employers with payroll save and borrow schemes. During 2022 the Hull branch recruited ResQ, Wellington Care and Hull & East Yorkshire Mind to offer the scheme as a popular staff wellbeing benefit. The branch also held workplace wellbeing sessions at KWL and Hull City Council.

The Credit Union has also moved with the times by introducing Green Loans, with a tree planted in the HEY Forest for each loan taken out. John said: “You can borrow for things like insulation or adapting your home with solar panels or with something more modest such as travel – we can fund a bike. Quite a lot of people have applied for cycles and small value home improvements. Maybe things like loft insulation, a more efficient boiler, better electrical appliances.”

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