GLASGOW, Scotland–One credit union here said it is prepared to help members deal with “Blue Monday.”
Blue Monday is the term used in the U.K. for when consumers are hit with credit card bills for their Christmas purchases. In an interview with the Herald, Glasgow Credit Union predicted debt consolidation and loans to pay off car payments will be among the key priorities.
“With more than 60,000 members, the CU has helped savers and borrowers weather previous financial storms and this year will be no different,” the Herald reported.
Paul Mcfarlane, chief technology officer with GCU, told the publication that while the outlook may seem bleak there is help at hand. “People think credit union and they think about a small voluntary-run thing out of a shop front, but that is not us,” McFarlane said. “We are a virtual digital first business and are competitive with our savings and loans.”
FOM Expansion
Initially established as the Glasgow District Council Employees Credit Union in 1989 for its employees, the CU expanded its field of membership the Glasgow postcode area and last year enlarged to surrounding postcodes in the west of Scotland, according to the Herald.
“Our mortgage product has usually been first-time-buyer-friendly and post 2008, when major lenders walked away from first-time buyers if they didn’t have a large deposit, we have stayed in that market and have still offered 100% mortgages off and on,” McFarlane said. “We offer 95% mortgages, which are difficult to come by without a large premium elsewhere, but that is not what we are about. We are about covering our costs to lend to members. As we don’t borrow money on the markets the way banks do, we get money from our savers, which we then lend back out. As long as we cover our costs we can get the most affordable rate for our borrowers.”
Younger Members Joining
In its 34-year history, GCU has lent more than £700 million in unsecured loans and mortgages and has a loyal membership, with 87% of the current membership having been members for more than five years, the Herald reported.
A total of 53% of new members – that is those who have joined within the last two years – are aged between 16 to 34, a rise within this age bracket on previous years, the report added, noting the largest increase in GCU’s products lately has been in consolidation loans.
“Around 10 years ago we introduced a debt consolidation product that was popular,” Mcfarlane told the Herald. “The idea is we pay your debt off for you and then spread repayments over seven years with a fixed interest rate. Promotional rates on credit cards have gone now and rolled from one to another, but the market closed to that so if people come to us with a loan of 14% it can be cheaper than the credit card interest rates.”
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