BARBADIAN CONSUMERS ARE being warned that their financial stability could be destroyed if they do not borrow cautiously.
Barbados Workers’ Union Co-operative Credit Union Limited general manager Corinne Clarke gave that advice in the first edition of its newsletter The Purple Post.
Clarke said this was especially relevant for individuals attracted to quick loans, but which could cost them more in the long run.
“Borrow with caution. This is my advice to consumers seeking credit from any financial institution,” she urged.
“I would go even further to say that when an institution just focuses on speed of lending, consumers must be even more mindful as some of these institutions disregard other outstanding expenses that the borrower may have and not disclose in order to meet the turnaround time promised.
“This can then prove to be very destructive to the person’s financial stability as income which would be used to cover some critical expenses such as rent, utilities or groceries, to name a few, is now being allocated to the lender. This is a very dangerous way to live.”
Clarke said experience showed that several people who sought the quick loan alternatives “are left in a worse situation after funds borrowed from these institutions are utilised”.
“Persons’ lives may be compromised and their current debts become too taxing on their lifestyles. In fact, we have had a number of persons visiting our credit union in search of help to rectify the debts which they incurred due to these unsafe lending practices.
“Fortunately, we in the credit union movement understand the importance of educating and following up with members to ensure that they are fully aware of the ramifications of these practices and to guide our members before accessing further debt.”
The general manager also commented on the Central Bank’s decision to allow deposit-taking institutions to set their own minimum deposit savings rates. She said commercial banks benefited more from this market liberalisation than credit unions.
“The strategy behind the Central Bank’s downward rate adjustment [was] to create more attractive deposits and also to raise funds to service debt accumulated by the country. The move did not benefit credit unions as much on the lending side,” she said. (SC)
