We hear a lot of information in the run up to Christmas on regulated moneylenders and the high rates of interest which they charge.
Moneylending is the practice of giving cash loans or supplying goods or services that are repaid at a high level of interest over a short period of time. Moneylenders are required to hold a licence to trade in moneylending. The Central Bank of Ireland regulates the activities of moneylenders and is responsible for issuing moneylending licences in Ireland.
A moneylending agreement is defined as "a credit agreement into which a moneylender enters or offers to enter, with a consumer in which one or more of the following apply:
1. the agreement was concluded away from the business premises of the moneylender
2. any negotiations for, or in relation to the credit were conducted at a place other than the business premises of the moneylender
3. repayments under the agreement will, or may, be paid by the consumer to the moneylender at any place other than the business premises of the moneylender
4. where the total cost of credit to the consumer under the agreement is in excess of an APR of 23 per cent., or such other rate as may be prescribed."
As of October 2010, there are 48 licensed money lenders in the Republic of Ireland. The rates charged by these moneylenders vary, with the highest being 188.45% APR. The Combat Poverty Agency estimates that there are 150,000 people in Ireland using money lenders.
Of course, the above information is relevant to licensed moneylenders and does not cover any groups or individuals illegally lending money outside of this structure.
Times are hard for many families, individuals and businesses. And though Christmas is a time of joy, it puts a lot of pressure on hard pressed parents trying to give the family a Yuletide to remember. The temptation is to borrow beyond our means, from sources that charge very high interest, resulting in a sack full of debt in the year to come. But you don't have to spend next year living with the Ghost of Christmas Past!
Here are some simple ways you save money this Christmas without being a Scrooge.
The 12 ways of Christmas;
• Budget, Budget, Budget. Plan how much you’re going to spend - and stick to it.
• Make a list. Decide what you're going to buy in advance. Decide in the store and you'll spend more!
• Pay with cash where possible. Avoid ‘expensive money’ via store cards, credit cards catalogues and money lenders – they’ll cost you more
• If you borrow be sensible. Borrow where the interest is right.....not on your doorstep!
• Compare prices. Before you buy, compare online and between shops. You’ll be amazed at the difference.
• Use trustworthy vendors. Buy from reputable websites and check they guarantee delivery before Christmas.
• Check for sales. Many shops will have sales before Christmas. Ask around, and maybe you could get those presents for even less!
• Interest free deals. Look for interest-free deals when buying furniture or electrical goods - but make sure to compare prices.
• Christmas clubs. Joining a Christmas club or buying a few savings stamps will help you now - it will also get you into the habit for next year.
• Read the small print. If you borrow or enter into a buy-now-pay-later deal, be careful. Some lenders will penalise you for paying it back early or, if you do not pay it within the interest free period, you could be subject to hefty interest payments.
• Under pressure? Talk to us first. Suffering from debt stress? Already owe money lenders? Call into your local credit union to discuss your options.
• Friends and family are priceless. It's easy to say but it's still true - the best gift at Christmas is being together - and that costs nothing. Many families do Kris Kringle or Secret Santa gifts. Some families only give gifts to children. There are many ways of saving money without taking away the magic.