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This week has seen the launch of a new credit union for the retail sector. The credit union, called retailCURe is heralded to be a big boost for the sector. It is backed by a number of high street names including Debenhams and John Lewis and aims to give retail staff access to finance. Former Dragons Den star Theo paphitis has also backed the new venture revealing that he and his businesses have invested over £100,000 in the not-for-profit venture.
Credit unions have been about for many years but they have become much more popular over the last few years. Essentially, they are financial co-operatives that are controlled and owned by their members, and are usually formed to help less well-off members of society to both save and access finance at cheaper rates. Whilst this is still generally the case, some are now targeting people of all incomes, offering them an alternative to other forms of finance such as bank and building society loans, credit cards, payday lenders and other alternative forms of finance.
Taking the example of the new retail credit union as an example, it’s clear that credit unions do have their uses. Membership of the new retail credit union is open to anyone who works in the retail industry directly or in a support role and who is over the age of 16. The retail sector is one of the lowest paid in the UK where the average wage in the sector fell by nearly 18% to £21,000 and has a high amount of part-time and zero hours contract workers. Therefore, there is no doubt that having a retail specific credit union is a good idea and can help such workers save and access credit.
There’s no doubt that credit unions have their place in the UK financial market and can be useful for many people but they are not a direct alternative to payday loans. There are two main reasons for this.
Credit unions have their place and are a welcome addition to the UK financial marketplace and are particularly welcome in sectors such as ritual that have been hit hard by the recent financial climate. However, should be seen as something that complements other sources of finance such as payday loans rather than a replacement.10 Reasons People Take Out Payday Loans »
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