The Church takes on Payday Loan giant Wonga

03 August 2013 - Which Way To Pay

    



The Bishop vs Wonga The Church take on the Payday Loan industry

The Archbishop of Canterbury has launched a plan to force the online lender Wonga out of business. How? By competing against it!

The Bishop, Justin Welby, announced last week that he wanted to put Wonga out of business, courtesy of The Church of England, launching its own credit union to lend people money. The Church of England plans to expand its involvement in credit unions to try and position them as a better alternative to expensive payday loans. Earlier this month, Archbishop Welby announced a new credit union that would be aimed at church staff and clergy, allowing consumers to borrow money at low interest rates.

The Church to compete payday loan companies out of existence

Archbishop Welby said the plan is to create "credit unions that are... engaged in their communities." Errol Damelin, Wonga Boss, said he was "all for better consumer choice". Archbishop Welby said the Church could do more to help non-profit lenders to compete with payday firms. He told Total Politics magazine "I've met the head of Wonga, and we had a very good conversation, I said to him quite bluntly that 'we're not in the business of trying to legislate you out of existence; we're trying to compete you out of existence'." The Association of British Credit Unions said it thinks it is a good idea for the Church to use its skills to help credit unions grow.

Payday Loans vs Credit Unions

The Bish as he is known in the ring, has done what all clever boxers and business people do best, cranked up the PR machine and has won key publicity points by picking a fight with the biggest contender Wonga. A Wonga payday loan charges 1% a day on short term loans, so according to the calculator a 300 loan for three weeks would cost 369 to pay back. Credit Unions on the other hand, cannot charge more than 2% interest per month by law a maximum of 26.8% APR. So a 300 loan over three weeks would cost just 302.76.

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