Would you credit it?
Up to 1000% APR - the reality of credit for those on low incomes.
A report, commissioned by The Co-operative Bank and Liverpool John Moores University has found that UK consumers on low-incomes may often pay in excess of 1,000% APR to gain access to credit facilities - over 30 times more than the most expensive store cards.
The report "Would you credit it?" supported by Citizens Advice and written by Paul Jones, of Liverpool John Moores University calls on the government to work with the financial services industry to develop financial education for consumers on low-incomes.
More often than not, sky-high interest rates from alternative and unregulated lenders such as buyback stores, are the only options available to the financially excluded.
The report looks in detail at the lack of information and credit options available in low-income communities and raises questions on the impact and extent of financial illiteracy within these areas. It recommends that financial literacy training at key life stages, such as leaving school and returning to work after an extended break, would help to prevent low-income consumers becoming trapped by expensive forms of borrowing.
"Would you credit it?" has now been presented to the Government.
Copies of "Would you credit it?" can be downloaded here. You can also purchase the report from Citizens Advice at www.citizensadvice.org.uk or by phoning 020 7833 7063/7064. The cost of the report is £10 plus £1.50 postage. All proceeds go to Citizens Advice.
Access to Credit on a Low Income
In 2001 the Co-operative Bank also commissioned research which was carried out at Liverpool John Moores University to explore how people in Liverpool on low incomes access and use credit facilities.
In it, nearly 60 people give voice to their own experience of borrowing and making ends meet on a low income; and of the debt and hardship often involved in accessing credit from non mainstream sources. It aims to deepen our understanding of the financial choices of low-income consumers and explore issues around accessibility, the ease and flexibility of loan repayments, the cost of credit and affordability. It sets the context of access to credit within the tradition and culture of the people of Liverpool.
Copies of 'Access to Credit on a Low Income' can be downloaded here.
