A COMMUNITY bank is set to open in Middlesbrough town centre to help cash-strapped locals manage their finances without resorting to high-interest lenders and loan sharks.

A two-year grant of £85,000 could be awarded to Moneywise Community Banking which already runs not-for-profit credit unions in the Tees Valley, East Durham and North Yorkshire.

Middlesbrough Council, which has been involved in a campaign to help residents hit hardest by the welfare reforms, will decide whether the venture should go ahead at its Executive meeting on Tuesday.

Account holders would be entitled to banking services such as savings and a Visa debit card as well as low cost loans, white goods and furniture at discounted prices, Christmas savings club, hamper club and free employability training.

Over three years the credit union, which is regulated by the Financial Services Authority which employs seven people as well as volunteers would aim to attract 4,000 new members, provide 1,200 training courses and give loans amounting to just over £500,000.

In Hartlepool where Moneywise was originally launched, it has more than tripled its membership in three years from 1,150 in 2011 to 4,047 in 2014.

A report produced for the meeting said all money deposited with Moneywise are fully protected by the Financial Services Compensation Scheme so cannot lose their savings.

A £300 loan taken out by a Moneywise lender could be paid back over a year at £6.59 each week totalling £342.79 at 26.7 per cent interest compared with a weekly repayment figure of £57.50 which amounts to an eye-watering £2,900 from an illegal loan shark charging a typical 1,000 per cent interest rate.

Councillor Dave Budd, Deputy Mayor and Executive Member for Finance and Governance, said using a credit union would help some people escape debt.

“A community bank such as this would be a real modern alternative to payday lenders and high cost lenders.

“You only need to look at the amount repayable on a loan from Moneywise compared to those offered by doorstep lenders, loan sharks and internet payday loan services to see why this issue is so important.”

He added: “A modern community bank would go some way to helping people escape debt and to benefit from the further services it offers.

“The high street presence is absolutely crucial to making the project a success and that this would offer additional services such as white goods and furniture at discount prices is another major bonus.”