Government eases rules for credit union loan scheme

The Government has tweaked the rules of a State-backed credit union loan scheme that was designed to steer social welfare recipients away from moneylenders.

The Government has abolished the scheme’s transaction fees and some of its bureaucratic paperwork to encourage more credit unions to get involved.

The “It Makes Sense” scheme provides loans through credit unions of between €100 and €2,000 to social welfare borrowers, who may have bad credit history and cannot access normal low-cost loans. They often must turn to high-interest moneylenders, especially at Christmas.

Under the scheme, a social welfare recipient who may not be a credit union member, and who may not be eligible for a normal loan, can borrow cash. The loan repayments are then processed through An Post’s Household Budget service, which helps social welfare recipients manage bill payments.

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Onerous bureaucracy

About half of credit unions had signed up for the scheme, citing a 25 cent per transaction processing fee levied by An Post, as well as onerous bureaucracy. Regina Doherty, the Minister for Social Welfare, says her department will now cover all the transaction fees to An Post, lessening the administrative burden. She threw down the gauntlet to credit unions that have not yet signed up.

“Credit unions have stated that the 25 cent charge per transaction to An Post was a barrier to increasing the number of credit unions participating in the It Makes Sense loan scheme,” she said.

“I therefore expect that reducing the cost of administering these loans will see an increase in the number of Credit Unions offering this important service to their local communities.”