Anyone struggling financially in the cost-of-living crisis has been urged to turn to credit unions rather than payday loan firms.
There has been a rise in the number of Renfrewshire families using cash instead of their bank cards in order to have a better control of their money and spending.
Post Offices handled £801m in personal cash withdrawals in July, the most since records began five years ago.
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It also comes at a time where borrowing money has put quite a strain on people’s pockets too as they often come with high interest rates, putting even more pressure on families as they struggle to make ends meet.
Yvonne Hughes, affordable credit officer for the Renfrewshire Affordable Credit Alliance, said: “Borrowing money to pay for everyday things such as food and bills has risen.
“But the cost of borrowing money has also increased with higher interest rates, and lenders are being more selective who they lend to, so it is harder to get credit too.
“If someone is thinking of borrowing money to get by there are alternatives to borrowing from mainstream lenders such as banks and credit cards. This includes short term loans from £100-£2000 from Scotcash or borrowing on a low interest rate from one of Renfrewshire’s five credit unions.”
RACA is made up of a variety of organisations including credit unions, banks, Renfrewshire Council and more in order to help people access fair and affordable forms of credit.
It is there to champion fair and honest finance – and ensure everyone, no matter their income level, has better options that help reduce the risk of them falling into problem debt.
Yvonne confirms that many people are increasingly more concerned about their money, rising energy bills and other bills and have resorted to changing their spending habits or even looking to borrowing to ensure that there is food on the table and bills are being paid.
There are several risks associated with payday loans such as they often come with extremely high interest rates which can then turn into a rather vicious cycle of debt as many struggling people take out a small loan, but with the high interest rates attached to the loan means a significantly higher amount needs to be paid back.
They can also harm your credit score which in return affects your availability to take out a mortgage, finance agreement or credit cards.
Some mortgage providers will refuse to lend to individuals who have used payday loans in the past.
There are those that are looking to help by ensuring that families can be provided with items when necessary and allows them to pay back once they can afford with more flexible methods to to prevent them turning to borrowing in desperation.
Yvonne explains: “There is also a provider of household goods and furniture called Fair For You who offer flexible ways to pay back if you don’t have money right now but need an appliance fast or in an emergency.
“All the providers we partner with are local to us and can prevent people turning to payday loans and Buy Now Pay Later services.”
For more information and advice on your money, visit www.raca.org.uk
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