The City of Lincoln Council is helping tenants manage their money after welfare reforms with new initiatives.
The council will become a member of the East Midlands Credit Union, so with the help of LincUp (Lincolnshire Credit Union) council tenants can set up a “jam jar” account – formally known as a Credit Union Budget Account (CUBA).
With the account, tenants can pay their earnings or entitlements into the account. This money is then divided into sections for whatever the tenant needs to pay each month, such as rent and utility payments.
They can spend any leftover funds on a pre-paid debit card that won’t let them to overspend.
Cllr Brent Charlesworth, Executive Member for Social Inclusion and Community Cohesion, said: “We have been campaigning against ‘loan sharking’ and payday loan companies that offer easily obtained, short-term, high-cost credit, most often to those struggling to raise families on poor wages or welfare benefits.
“The Credit Union and the City Council, working together, want to offer council tenants who may be in financial difficulty access to safe, relatively cheap credit and provide for them a basic banking facility that will take the worry out of budgeting.
“Tackling poverty and disadvantage is one of our three major priorities and we believe the long-term security this account offers could make a real difference for those in financial difficulties. We would encourage tenants to take advantage of this scheme.”
The scheme will help tenants impacted by recent welfare reforms, including Universal Credit, where housing benefit is paid directly to the tenant rather than the landlord, leaving the responsibility with the tenant to pay.
As well as the jam jar scheme, the council will introduce a £10 voucher scheme for new tenants to save with the credit union rather than borrow at high interest.
The council will deposit £5 into a share account to activate credit union membership for new tenants, and if the tenant saves another £10 in a 12-week period, the council will deposit an extra £5.
John Bibby, Director of Housing and Community Services, said: “The purpose of these initiatives is to encourage savings and assist tenants to manage their budgets, helping people avoid falling into rent arrears and consequently risk losing their homes.
“These accounts will also allow the account holder to apply for low-interest rate loans and will reduce the need within the city for ‘pay day’ loans and the use of loan sharks.
Linda Burden, Business Development Manager at Lincolnshire Credit Union, added: “We are delighted to be working with the city council on this new initiative and while we offer safe savings and affordable loans to everyone who lives or works in Lincolnshire, a particular aim of ours is to support those who may be financially excluded or who have little or no access to budgeting support or affordable credit.”
To find out more about the Credit Union Budget Account (CUBA), call Lincolnshire Credit Union on 01522 845100 or visit them in Lincoln at 390 High Street.