With the festive frivolities now over and credit card bills arriving thick and fast. Lizzie Anderson finds how community banks can help people improve their finances this year

WEEKLY payment stores are a familiar sight on the British high street and - thanks to the power of television advertising - British living rooms, where their enticing messages are absorbed by people of all ages. These adverts show smiling people “just like us” getting everything they want for what appears like a reasonable weekly payment. The interest rate is shown in small text at the bottom of the screen or read out a pace so rapid it is near possible to take the information in.

In the run up to Christmas, Durham County Council, in partnership with Prince Bishops Community Bank and the North East First Credit Union, funded a different kind of advert, a promotional video alerting people to the dangers of weekly payment stores. It shows how shoppers can pay up to £1,500 for a £500 iPad when purchasing it in this way.If they had borrowed the money from Prince Bishops Community Bank, for instance, they would pay about £92 interest.

Credit unions and community banks have been offering low interest loans and saving plans for decades. They are regulated by the Prudential Regulation Authority and the Financial Conduct Authority, and are part of the Bank of England’s financial compensation scheme. But in the UK, only three per cent of the population are members of a community bank. In contrast, this figure is 50 per cent in the United States, 60 per cent in Australia and 85 per cent in Ireland.

Paul Atkinson, community development co-ordinator at Prince Bishops Community Bank, frequently sees people struggling to keep up with weekly store payment plans. He is on a mission to promote credit unions and ensure the risks associated with weekly payment stores, pay day loans and loan sharks are made apparent to people from a young age.

Thanks to funding from Weardale Area Action Partnership (AAP) and Derwentside AAP he has set up sensible saving schemes in more than 20 schools across both areas, and has also given presentations highlighting the benefits of credit unions.

He says: “It's difficult to get hard and fast statistics because people don’t always want to talk about their finances, but we know that large percentages of the population in certain parts of Durham regularly go to weekly payment stores and apply for pay day loans to buy the things they need.

“These companies have a platform, they advertise nationally. One of the problems we have is that people don’t know credit unions exist. I run a financial planning course in Derwenside and people often defend weekly payment stores even after I tell them how much more money they are paying out. These methods have become ingrained into our culture, and that is why is so important to spread the message among children.”

In the Durham Dales, Mr Atkinson has set up saving schemes at primary schools in Wearhead, Rookhope, St John’s Chapel, Forest of Teesdale, Wolsingham and Stanhope.

He says: “Children tend not to understand the value of money until they are about seven years old but after that they are pretty savvy. They ask me some grown up questions and they take everything in. We are trying to encourage the idea of putting off what you want today for a better tomorrow.”

Wolsingham School is the first secondary school in the area to sign up for the scheme, with sixth form students helping to run the bank in school.

Assistant head teacher Mark Stemp said: “These children are the next generation of people who are going to run the country. They may become doctors, builders or even the Prime Minister. Teaching them valuable life skills is a vital part of their education, and learning to manage money is very important.”

Prince Bishops Community Bank is a not for profit organisation, run by the community for the community, with any profits paid back to members as dividends. Loan interest rates range from 0.5 per cent to three per cent per month depending on circumstances and amount. A percentage of the repayment is also placed into a savings account, helping members to save.