Interest Rate Restrictions on Credit for Low-Income Borrowers
Posted on: 14 Nov 2018
The Irish League of Credit Unions has welcomed the new report; Interest Rate Restrictions on Credit for Low-Income Borrowers. The new research was carried out by University College Cork and funded by the Social Finance Foundation and the Central Bank of Ireland. The ILCU also supports the report's recommendation that an interest rate cap is introduced in Ireland.
Welcoming the report, the ILCU said; "The Government is allowing the most vulnerable in our society to remain in cycles of debt by failing to establish interest controls. An interest rate cap is a fair and prudent approach and we urge the government to take action on this.
The ILCU particularly welcomes the report’s finding that credit unions represent a viable alternative to high-cost credit providers, specifically with the Personal Microcredit Scheme (PMC). The PMC has been very successful to date and is a life-line to affordable credit for those who are availing of the scheme, and for those planning to avail of it. As expected, there has been steady and incremental growth with the PMC initiative, and the ILCU is very pleased with the numbers applying for the loan.
There are over 6,000 live loans currently across 110 credit unions in 266 locations. The number of live loans continues to grow every week, and the ILCU also expects the number of credit unions offering the loan to increase again in the coming months. As an initiative that was designed to, over time, loosen the grip of moneylenders, with their often exorbitant interest rates, on the most vulnerable in society, the PMC loan, with a maximum interest rate (12.68%) is meeting with solid success."