My Community Bank, the online credit union targeting borrowers and savers across the UK, launches today and has vowed to take on payday lenders with affordable short-term loans.
Credit unions – which have been championed by both the Prime Minister and the Archbishop of Canterbury as an affordable, not-for-profit alternative to payday loan companies – are a cross between a co-operative and a bank and see responsible lending as an “antidote to payday loans”.
My Community Bank will offer loans of between six and 36 months, with a decision in principle provided instantly via an online affordability and credit check.
Its loans could offer a way out for people trapped by the payday loan companies that can charge interest rates of almost 6000% APR when customers ‘roll over’ their borrowing. In almost all cases these people are unable to refinance via a loan from a traditional high street bank.
Mohsin Mehdi, CEO, My Community Bank, said: “As a Community bank we are all about Community Savings, Community Borrowing, Ethical Banking and Community Prosperity.
“We don’t just want to offer people an alternative to the high street banks, and a great savings rate for anyone looking for decent returns. We also plan to take the fight to the payday lenders of the world.
“We are an antidote to the addictive and expensive type of loan offered by payday lenders.
“We will lend to people who aren’t lucky enough to be in the top 10% of borrowers that the high street banks will lend to.
“And yes, we will offer a lifeline to those considering borrowing from a payday loan company and to those who have already done so and are now trapped in the roll-over trap.
“We will offer highly competitive savings products, and we stand shoulder-to-shoulder with the Archbishop of Canterbury in his campaign to rid the UK of payday lenders with our fairly priced and responsible loans.”
As a credit union, My Community Bank requires its members to share a ‘Common Bond’. My Community Bank has two Common Bonds. Firstly as its roots are in the London Borough of Brent, membership of My Community Bank is open to anyone who lives or works in Brent. Nationally, anyone can bank with My Community Bank if they are a member of an association – or if they support a charity – that promotes the welfare of Britain’s South Asian community.
Anyone can become a member if they share either of these two common bonds.
As part of its commitment to the South Asian Community, My Community Bank has partnered with the British Asian Trust, a charity founded in 2007 by a group of British Asian business leaders at the suggestion of HRH The Prince of Wales. The Trust provides funding to support high impact charities within the areas of education, health and livelihoods in Bangladesh, India, Pakistan and Sri Lanka.