MABS warns against moneylenders as festive pressure grows

People in the south-west who never previously used moneylenders are now turning to credit agencies which are charging exorbitant interest rates.

Christmas spending is adding to pressures on people, some of whom are already in debt to banks and credit unions which now have stricter lending practices.

The Money Advice and Budgeting Service (MABS) has warned: “People, for example, who have gone into arrears with a credit union cannot go back for money so their traditional sources of credit dry up.”

Jerry Doyle, who heads MABS in Kerry said, in desperation, some people turn to moneylending companies which can charge interest rates of more than 180% on loans compared to 9% interest by a credit union.

That could result in €138 extra interest being paid on a €500 loan over 26 weeks, he pointed out.

Mr Doyle said people who could least afford it were having to prioritise repayments to moneylenders at exorbitant interest rates because moneylenders’ agents were calling to family homes every week to collect repayments.

He also said licensed moneylenders were obliged to respond to MABS when it negotiated on behalf of people in difficulty.

Kerry MABS and Tralee Credit Union have jointly launched a Take the Mayhem out of Christmas campaign with tips for shoppers who are urged to set a realistic budget and stick to it.

Meanwhile, Independent Killarney town councillor Paddy Courtney called on Finance Minister Michael Noonan to outlaw interest rates as high as 18% on credit cards.

He said he wanted to raise awareness of the issue in the Christmas period when there was a significant rise in household spending: “These outrageous charges are being inflicted by the very banks that the people have been asked to bail out.

“We’re now in the run-up to Christmas. A lot of people are still trying to make ends meet and are being slaughtered with bills.

“People may not have much choice but to use the credit card to make some purchases for Christmas. They may not have any other means of getting that extra money they might feel they need over the next few weeks, and will end up for years trying to pay this back.”