Overdraft? Under control?

Overdraft? Under Control? Back in 2011 I was interviewed for a local paper for a piece on affordable credit. It was around the time when community credit unions were becoming more widely known about and it seemed a good way to promote the services we offered. After the usual questions the journalist put her pen down and rather sheepishly mentioned her own £1500 overdraft, “How much” she asked “would a loan for the same amount be?” I did some quick calculations and told her that a loan over eighteen months would be around £100 per month. She was horrified “But my overdraft only costs me £35 a month!” I tried to explain to her that the credit union loan was for a fixed term, at a fixed rate of interest and with fixed terms and conditions, whereas, if she never tackled the balance, her overdraft would continue to cost her at least £35 per month indefinitely. She wasn’t having any of it! We parted company, leaving me with the realisation that, on the whole, for those who have one, overdrafts no longer register in their consciousness as a debt.   Long term debt & short term costs Fast forward to December 2017 and the level of indebtedness caused by overdrafts is well on the radar of the Financial Conduct Authority and the feature of a report publish by debt charity Step Change. Understandably so, an estimated 13 million account holders went into overdraft during the last twelve months. Because overdrafts are considered short term borrowing, there is a tendency to think about them in a ‘short-term’ way. The charges...

Churches’ Mutual – An International Credit Union

Churches’ Mutual – An International Credit Union Over the past three years of commuting from Birmingham to Gloucester, Morning Prayer courtesy of the Church of England’s Daily Prayer App has become a regular feature (along with – before you get the wrong idea – talking, snoozing, breakfast, bemoaning the state of public transport and, of course, catching up with a bit of work), and I have learnt a few things too. According to the lectionary 19th September is the day we in the Anglican Church commemorate Theodore of Tarsus, Archbishop of Canterbury, 668-690. I have to confess my first thought when I read this was the not very spiritual “Well, matey, you were a long way from home”. I’m not that knowledgeable on Middle Eastern geography, but as a result of a rather more famous early Christian originally from Tarsus I know Theodore started life in what is now Turkey.   I shouldn’t be surprised, the Christian journey has always been for many a physical as well as a spiritual one. Of the early saints who brought the faith to these shores, St. Ninian was a Briton who arrived in Scotland via Rome, St. Aiden was Irish and St. Cuthbert was born in Dunbar. In England, St. Augustine, who established the Archbishopric at Canterbury was… best described as an Italian (had Italy existed at the time). So it has gone on through the centuries that the life of the Church in Britain has been enriched through the ministry of people from all over the world.   The third Thursday in October is International Credit Union Day The day when...

Just Seventeen

Ash Wednesday, the start of the penitential season and a period of self-denial is hardly the most appropriate time to be thinking about buying a car. But by falling on the 1st March this year, Ash Wednesday coincided with the launch of the ‘17’ registration plate and a new round of cars available to buy. There’s nothing quite like a new car, the smell, the novelty of having 3 miles on the clock and, in my case, kangaroo hopping down the Alum Rock Road in search of the elusive second gear! But unless you have a few thousand stashed away in your sock drawer then you, along with around 80% of all car buyers, have to negotiate the many and varied ways of securing a car on credit. Almost every car dealer will offer you car finance – it’s a big source of profit for them – and the choice can be confusing.  A few years ago car finance automatically meant hire purchase but now there are a number of different ways, personal loans, leasing, and even credit cards to help you drive away your dream car but I’m just going to look at one of them; the most popular, and the one with the most pitfalls. The Personal Contract Plan – Often advertised with headline monthly repayments that seem almost giveaway. The PCP has three components: the deposit – the percentage value that you can afford to put down the monthly repayment – determined by the size of the deposit and the cost of the finance (typically between 7% and 14% APR) the final lump sum (balloon payment) – the amount...

Annual General Meeting 2017

Annual General Meeting 2017 Our Annual General Meeting took place on Friday 27th January 2017 at Church House, Westminster. For those who were unable to attend the AGM, a copy of the board presentation to the members can be found here. The annual accounts were approved and signed and are available to download here. The meeting also approved the payment of a dividend to savers, details are on our home page. If you would like more information regarding any aspect of the AGM please contact us on the form below: Name(required) Email(required) Comment(required)...

The Little Red Book

I was stocking up on stationery a couple of weeks ago when I was side-tracked by a display of familiar little red books. No, not the Little Red Book (or, to give its full title, Quotations from Chairman Mao Zedong) which has somewhat surprisingly managed to get a name check in the Chancellor’s autumn statement two years running but rather little red Cash books like the one illustrated. Back when I worked in money advice we were often left baffled by clients who on paper appeared to have ample income to cover their expenses and yet in practice were consistently in default with accounts and found budgets impossible to adhere to. As a last resort we would issue them with a little red cash book (10 for £1.00 from City Supplies) with the instruction to come back to us in a month’s time with every penny (yes, every penny) they had spent written down. We had mixed results, while some clients managed to successfully record most of their expenditure just as many lost track after a few days, or even lost the little red book. Our most memorable failure however, was the client who replaced her Silvine cash book (price 10p) with a limited edition green silk bound Moleskine notebook (price £10) because the book we had given her “looked cheap”. Was it easier or harder to keep tabs on spending then? Back before contactless, small purchases required cash in your hand or you risked the hostile glares of fellow shoppers as you paid for a Mars Bar or a packet of crisps with a debit card and had to sign! Now...

Special General Meeting 16th July 2016

NOTICE of SPECIAL GENERAL MEETING The Roman Catholic Church of England, Scotland and Wales has approached the Churches’ Mutual Credit Union with a request that we offer credit union services to their clergy, employees and volunteers in key positions in the way that we do to our existing denominational partners. The first stage in this process is for the existing membership to agree the change in the Common Bond, and for this reason the board of directors have called a Special General Meeting on Saturday 16th July 2016. The meeting will take place at the Beeches Conference Centre in Selly Oak Birmingham at 12.30pm. Follow this link to see the agenda and motion. SGM Agenda and Motion A Special General Meeting may only discuss the item for which the meeting has been called. We hope as many members as possible will be able to attend, A buffet lunch will be provided for those who RSVP to admin@cmcu.org.uk no later than 1pm on 8th July 2016. The Beeches is situated conveniently just off the A38 Bristol Road in Birmingham. Full directions can be found here   Name(required) Email(required) Comment(required)...

Bias to the Poor (Part 3)

Christians have been involved with credit unions since they first reached these shores. North Birmingham had strong links with Catholic, Baptist, Methodist and Anglican churches through hosting collection points and providing volunteers. But in many ways it fell into the category of mission or outreach, part of what we could call the Church’s ‘bias to the poor’. If Christians joined the credit union they did so in the capacity of ‘Angels’, investing capital for the encouragement of others and to enable the lone parent at mums and tots to buy a washing machine. In 2013 the Financial Services Compensation Scheme produced an information video outlining its work with credit unions and it featured a very telling comment from a vicar in regard to his local credit union “my idea with the credit union is that I was giving twenty quid a month to a good cause”. But as long as people choose to view credit unions in the same light as a charity or a good cause they will never provide a ground breaking and sustainable alternative to banks and finance companies. Credit unions need to be the lender of choice for people of choice, they need customers not patrons. 2011 saw the end of the DWP Growth Fund and many local authorities having to tighten their belts. Many credit unions had been unable to achieve sustainability during the ‘fat years’ and went under, in the West Midlands, for example, seven community credit unions cease trading in an two year period between 2011-2013. Often this was due to a combination of factors, poor credit control and governance primarily but with the residualisation...

Bias to the Poor (part 2)

The Social Security Act 1986 introduced the Social Fund; whereas before, under the old ‘single payments’ system individuals in need had been able to apply for grants for furniture and a vast array of other items, these were now replaced by Budgeting Loans.   While it was possible to argue a case for a Community Care Grant – even 27 years on I can still quote the regs – on the whole successful applicants were usually awarded a loan. Individual DSS offices had an annual budget and often ran out of money towards the end of financial year, if an application was declined in March it was usually worth waiting until April to appeal. This curtailing of DSS grants, aimed at cutting what was seen as the ever spiralling welfare bill, drove those on benefits to seek funds for essential household items and, to be honest, Christmas and Birthdays and general cash flow, from doorstep lenders such as Provident (once a shilling in the pound) and rent to buy stores or, in desperate times, the local loan shark. In an economy dependent on people spending money on goods and services the level of personal indebtedness rose to unprecedented levels. By the time I started working for a North Birmingham Community Credit Union in 2005, credit unions (at least those working in local communities) were firmly viewed as in the camp of the sub-prime sector. So how had this come about? Changes in legislation in 1994 had removed the restrictions on the size of a credit union common bond (catchment area) which had previously been set at 30,000. As a result many of the local government...

Bias to the Poor (part 1)

It came as something of a surprise to me when I realised late last year that I had managed to clock up twenty-five years as a member of a credit union. Doesn’t time fly when you are having fun? My first credit union was the impressively named Birmingham City Council Employees’ Credit Union (now more succinctly known as ‘Citysave’). Launched in 1987 and despite working in what was then known as ‘anti-poverty’ and being a believer in all things co-operative and mutual it still took me a couple of years to get round to joining. It is a truth universally acknowledged that a single woman in possession of a good salary must be able to save. This was far from the truth in my case. I was not in debt, and I managed somehow to keep my head above water by earning more than I spent, but only just. In the late 1980s, lunch was for wimps, we worked hard and partied harder and I shudder to think how much I fed into the economy of various clubs, curry houses and private hire car companies as three out of every four weekends were spent out on the toot. Joining the credit union was spurred on by the need to pay for a holiday, I had enthusiastically and without much thought agreed on a jaunt to Mexico. The £50 deposit was fine, the £750 balance was another story, so some kind of savings scheme was required. The credit union was brilliant! The twin factors of the convenience of having savings deducted directly from my salary combined with the inconvenience of...

Some Thoughts on our First AGM – 22nd January 2016

Readers of this blog will realise that I tend to write on an ad hoc basis on various subjects as the fancy takes me. Unfortunately there’s nothing quite like having to write something to order to bring on a massive case of writers’ block so when I was asked to write a piece for the Church of England I ended up trawling the internet with the vague idea that other people’s AGM blogs might provide a starting point for mine. The thing that struck me was that AGMs are very much a review of the past year and that Churches’ Mutual hasn’t even had a year, at least not a full one. Three hundred and forty-four days, fifteen hours and a few minutes ago I was in Church House packing away the debris of the official launch thinking “that’s it, now we have to get down to the business of being a credit union”. We had no members, no depositors and no borrowers and while we had lots of enthusiasm there were undoubtedly a lot of questions too. Would people join? When the idea of a credit union for Church ministers, employees and trustees was first mooted (some eight years ago), the feedback was positive, but would that general level of interest translate into real live members? The answer to that one is yes it has. It was with great excitement we watched our first applications come through. We operate an online system that sends us an email every time someone joins and it was marvellous to open the mailbox and see twenty new applicants just on the first day and it is rare...