KIDLINGTON’S first community bank has been launched to deter residents from being tempted by extortionate pay day loans.

The not-for-profit service was set up Cherwell District Council and Sanctuary Housing as an expansion of the Northamptonshire Credit Union.

Every Friday the community bank will run alongside North Oxfordshire Community Food Bank with four volunteers at Kidlington Baptist Church.

The launch follows two community banks that opened in Bicester and Banbury last year, offering financial advice and affordable loans.

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Interest rates depend on the size of the loan, starting at 12.7 per cent APR, and are capped by law at 42.6 per cent APR (annual percentage rate).

Pay day loan providers typically charge interest rates of 1,000 per cent to 6,000 per cent APR.

Volunteer Giles Wakeling, who lives in the village, said the money is sourced through ‘angel loans’ from the Northamptonshire Credit Union. ‘Angel loans’ are sums of between £5,000 and £10,000 provided by ethically minded investors for the bank to use for up to 10 years.

The retired 69-year-old said: “The idea is that we offer people affordable loans for things like washing machines breaking.

“Other banks may not be able to give them these loans because of their credit history but we want to help people that do not have access to loans other than pay day ones.

“We all know people that are going to struggle to have enough money at the end of the month and we trust it will be a helping hand to people”

North Oxfordshire Community Foodbank organiser Melvina Fawcett said she hoped the community bank would help people who otherwise struggle to secure loans.

Mrs Fawcett said: “We want people to use a bank that is much better than pay day loans for people to save properly.

“It is so that people don’t have to go to these pay day loan providers.

It is being done through the council and is for people that have difficulty getting loans from normal banks.

“It will run in the other room from 11am to 12.30pm and there will be volunteers offering financial advice and point them in the right direction.”

Cherwell District Council’s lead member for housing Debbie Pickford praised the presence of a credit union in the area.

Miss Pickford said: “It is good to have the credit union in the area. Since we helped set up the community bank with our partners it’s gone from strength to strength.”

“It’s a safe way to save, borrow and budget, and is proving a great asset to our residents.”

Volunteer Lynne Weir, who is retired and lives in Cumnor, said: “It seems that the people who are most vulnerable are effected by pay day loans.

“We look at more than just someone’s credit history.”

For further information call 01604 250016.