Another way, with Credit Unions
JUST switch on the television or open a newspaper and sooner or later, you will see an advertisement for a loan company.
Very often, these companies will tell you how easy it to borrow money and that you do not have to go through credit checks and simply have to fill out a form.
It all seems too good to be true.
When you look at the sky-high rates of interest, it very often is.
One online company offers a staggering 4,000 per cent rate of interest, meaning repayments will continue for years and can be many times more than the amount originally borrowed.
Things are made even worse by the various doorstep lenders, who prey on people who simply want to borrow small sums of money, say for an unexpected bill or house repair, and get charged huge rates of interest.
I can still remember as a child growing up in the Valleys, the woman from one of these doorstep lenders visiting our street each week to collect payment.
The funny thing I noticed was that no-one ever seemed to pay her off, as she would offer a new loan as the old one was about to come to an end.
Perhaps even more worrying is the fact that some families will be driven into the hands of illegal lenders, or loan sharks, who will have very little regard for the terms and conditions of the money they lend.
The worse thing about this is that there is another way.
I am a member of Islwyn Community Credit Union, which offers saving accounts and small loans to its members, who pay in as much as they want on a regular basis and after a few months, become eligible for a loan at a low interest rate.
The loan comes out of the total pool of money saved by members and the interest paid on the pool is returned as a dividend – it really is that simple.
There are no administrative fees and no penalties for early repayment of the loan.
Credit Unions encourage their members to save for the future, and in return, they receive affordable credit, free insurance on savings and loans, financial advice and a healthy return on their money.
To become a member of the Islwyn Community Credit Union, please call 01495 222 832, e-mail firstname.lastname@example.org or visit the website at www.islwyncu.co.uk