Credit Unions and Christians
Why we should use them: an interview with Baptist minister Chris Lewis, a director of the Swansea Bay Fair Credit Campaign
So, Chris tell me about credit unions? How do they work?
Some people would say, “Piggy banks, cash in a jam jar, poor people’s banks…” These terms imply derision. It is true that credit unions have their origins in 19th century penny banks and in the UK, among West Indian immigrants whom the banks would not take on as account holders. There is nothing wrong with saving cash in a jam jar; it is prudent to have a little reserve for that extra bottle of milk or loaf of bread.
Credit unions are savings banks that offer loans to their members. Many offer other services besides. Before you take out a loan, you must become a member and a condition of membership is regular, affordable saving. Credit unions are co-operatives, owned by their members. The members elect their directors. Profits, from interest on loans or investments go back to members in the form of dividends. They are regulated, just like banks and building societies and savers deposits are protected in the same way.
The public face may still be the young mum with an account book collecting small amounts of cash at the playgroup. Behind this there is a growing and increasingly professional movement offering more of the sort of services, like on line banking, that we have come to expect from high street banks.
As credit unions become more professional, the difference between a retail bank will perhaps, become less evident. Credit unions will still be mutual. Members are joined in what is called a ‘common bond’. It may be a geographical area, like ours, or some other sort of connection. For example, the Churches Mutual Credit Union is for ministers and staff of the Church of England, Methodist Church, Church of Scotland and Church in Wales.
The banking crisis of recent years has caused a loss of confidence and people are looking for different sorts of financial service providers, this is a factor in the growth of credit unions in the UK. Credit unions offer an alternative.
Why should Christians think about using credit unions?
When I read both the Hebrew and the Christian Scriptures, I am struck by an attitude to the poor that is distinct from that of North European culture. Poverty is something that happens, a fact of life, ‘the poor you have always with you’. Measures to relieve poverty are set out in the Torah, allowing the poor to glean and in the restoration of property in the Jubilee year. The prophets raged against those who exploit the poor (for example, Isaiah 5.8ff; Micah 2.2ff; Habakkuk 2.6ff).
So often in our culture there is an idea that poverty is blameworthy. I have even heard TV productions like Benefits Street called ‘poverty porn’. That poverty and guilt became associated in the minds of the founders of the Protestantism may have something to do with the German word ‘Schuld’ which means both ‘debt’ and ‘guilt’.
I think the ethos of the Hebrew Scriptures is about a sustainable society, where people held property rather than owned it, they inherited and they passed on and they helped those in difficulty because so that society and faith were sustained, a sort of ‘common-wealth’. It’s a bit like this armchair in which I’m sitting, it belonged to my Tad cu (my Grandfather), the chairs around our dining table and the press in which we keep our best clothes came from my wife’s family, and in turn we hope to pass them on. It’s only Welsh cottage furniture, not worth anything much as antiques but valuable to us, part of our heritage and identity.
The trouble with a lot of financial ‘services’ so called, is that they do not serve the user. Too often, they export money from where it is short into the pockets of shareholders, venture capitalists, hedge funds, to tax havens, not common wealth but private wealth and so the rich – poor divide widens. Credit unions, by their co-operative structure, keep money in communities. This should appeal to Christians as a means of practical social justice. A system keeping and getting money that does not exclude the poorest is in the spirit of ‘good news for the poor’ (Luke 4.18ff). Suppose someone needing a new car or some home improvements finances these through a credit union as a matter of Christian principle, then what they pay contributes to the common wealth. Don’t forget that the interest will be in nearly all cases, lower than a ‘commercial’ rate. That’s an added incentive.
There’s also something that might appeal to Baptist Christians in particular; it has to do with emancipation and the other side of the same coin, taking responsibility, recognising and affirming people’s true humanity. Credit unions as co-operative societies are not so different from the way we organise our churches. I think that congregational government is a way of trying to express the ‘abundant life’ (John 10.10) and inclusivity of the Kingdom of God. There is something that feels like a covenant about membership and this mutual and ethical quality is attractive, not just to Christians. The credit unions I know about are growing their membership, though the confidence to borrow has not yet reached us.
Tell me something about the current climate as you see it, where do people turn to for money?
There is credit out there, perhaps too much. A lot of us get bombarded with offers of loans. If you’ve got a good credit rating it’s easy to get a loan, you can go shopping for the best rate.
If not, you are too high risk and ‘hands off’ for all but the lenders who will take a risk on you. Their compensation is high interest, they hope that what they lose on the defaulters they’ll make on the others. It’s about profit, after all.
Now, I live and work in a significantly deprived and low-income area. When people haven’t got a lot of money and something happens, the fridge breaks or Christmas is coming the temptation to turn to someone offering what looks like easy credit is strong. Of course, the high interest rate is the sting in the tail. The old–fashioned way was the worst of all, the moneylender, the loan shark; and they are still there.
Then there is the doorstep lender working for a company, someone who herself is often not too well off and becomes implicated in the cycle of exploitation, just to earn a bit. Borrowing by means of the catalogue (people often call it ‘the book’) making easy payments, amounting in the end to a good deal more than the retail price of goods in the shops. We all know about the payday lenders, I might get sued if I say anything too specific about adverts, things on web sites, sneaky, pathetic little text messages ("We miss you") and heavy collection practices. Yes, payday loans can work for people but it’s not wise unless you have the cash flow to pay it on time.
When money is tight, when Christmas is coming, an occasion demanding smart clothes is round the corner, when the fridge stops working - all of these high cost financial snares can look like easy ways. They aren’t. Someone who came to our food bank told me she had paid four times the retail price for a fridge freezer from a rent to buy store. I wish she had known about our credit union, she could have had the same appliance, at a discount and on much easier terms.
Everyone has to some extent these financial ups and downs, what’s needed is a way is saving in the troughs and cutting a bit off the tops of the waves – being prudential, not a fashionable idea in a world of high pressure consumerism. Sadly, a lot of people learn the hard way, the foodbank is where we meet some of them.
So can you tell me how do credit unions help people in practice?
Credit unions really can help people. Just like a bank we have a duty of confidentiality, but I can tell you some stories in general terms.
Our neighbourhood was where the Swansea Bay Fair Credit Campaign started. Suzanne, a worker with Faith in Families (Church in Wales) gathered together a group of young mums who had fallen into one or more of the traps and helped them talked about their plight. It was a very courageous for them to do and I admire them for it. With the help of the credit union, their debts were rescheduled and they are now out of trouble. As members of the credit union they are able to save and are better able to plan for Christmas, birthdays and contingencies: funding Christmas presents was the start of the trouble.
Our credit union, LASA, has been leading the way with a scheme for prisoners at HMP Swansea. Prisoners, on admission have been offered the option of opening an account and their prison wages and their release grant are paid into the account. Men who had never managed money learned the trick. It has cut down disturbances in the prison as a result of prisoners borrowing from other prisoners and failing to repay.
On release, they can get their rent paid from benefits and a preloaded debit for cash or purchases; money managed in this way has kept some from reoffending. This is saving you, the taxpayer money; it’s hard to a figure on it but substantial, I think. It isn’t always a case of going from profligate to prudential but recently one former prisoner member applied for a loan to start his own small business. He had his business plan worked out to the penny.
We also support a junior credit union in a school; the children themselves run it and take it very seriously. Their accuracy in dealing with their ‘customers’ accounts, pupils, parents and teachers is impressive, without calculators! It’s a sort of long-term investment, the skills of handling and managing money are learned early and we hope, remain for life. There’s a ‘trickle down’ effect too, the children are teaching their parents, I hear.
What about you? How did you get so involved?
The Vicar and I were in the background in support of the Swansea Bay Fair Credit Campaign from the start. Well, not so much in the background, I suppose. I was asked to speak
at the launch of the citywide campaign. Some of us lobbied our politicians at the Senedd, the then Minister for Tackling Poverty, Jeff Cuthbert AM
came to our chapel to hear testimonies, we advised on a private member’s bill, went and spoke at Movement for Change at couple of Labour Party conferences and were invited to a meeting on churches and credit unions in a Parliamentary committee room.
The credit union manager was another of the speakers at the launch, we worked alongside each other and though networking, I progressed from being just a credit union member to a director. I spoke before about the similarities between a Baptist cause and a credit union. The credit union people recognise this too, add to that some experience of world of business through being a workplace chaplain and of being a not-for-profit company director, it seemed right.
Home Mission pays for some of my time to be a community chaplain and I think that this is a legitimate expression of the role. I’m not the only Baptist minister who is involved with a credit union, I know of
Tim Presswood’s work in Manchester, he‘s far more distinguished than I. Chaplaincy is an incarnational, ‘get alongside people’ sort of ministry. That’s why I’m doing this. I’m trying to be a useful director. I enjoy it, the people, the problem solving, the Gospel applied to public life.
That last point is in the tradition of Welsh Baptists, so nothing new, really.
Chris Lewis is minister of Mount Zion Baptist Chapel in Bonymaen, Swansea and a director of the Swansea Bay Fair Credit Campaign
Picture £20 notes: Keattikorn/freedigitalphotos.net
Baptist Times, 06/12/2015