High cost credit refers to loans offered by fringe lenders, where as well as a high rate of interest, numerous fees are also charged.

Many disadvantaged consumers are drawn into high cost loans by the advertising which promotes the loans as being available to those with a bad credit history and also advertises that the credit can be accessed straight away. These high cost loans are promoted as a way of solving consumers’ financial problems, but are more likely to keep consumers in a never ending debt trap.

Many people on low incomes or in financial difficulty enter high cost loans because they are not aware of other alternatives which include:

Centrelink

Centrelink provides financial support in addition to regular entitlements, such as a special benefit and crisis payment for people experiencing severe financial hardship (eligibility criteria apply), a pharmaceutical allowance to cover the cost of prescription medicines, rent assistance and telephone allowance. To obtain more information contact Centrelink on 13 10 21 or visit www.centrelink.gov.au

No interest loan scheme (NILS) 

The ‘no interest loans scheme’ offers loans for essential household goods and medical equipment at no interest. A typical NILS loan is for $600–$1000 and available for essential household goods such as a washing machine, fridge or medical appliances such as a wheelchair. As loans are repaid over 12-15 months, the money is lent out again to other people in the community. NILS are run by local community groups such as Neighbourhood Centres or charities and lend money to people in their local area only.

Credit unions

Credit unions offer loans for as little as $200 with terms starting at 3 months.

They assess consumers’ repayment ability and lend to those on welfare benefits.

National Australia Bank (NAB)

NAB and the Good Shepherd Youth and Family Service offer consumers a safe credit alternative - the StepUP loan, which has a fixed low interest rate and no fees and charges. StepUP loans are specifically for:

• individuals or families holding a current Centrelink Health Care Card or Pension Card
• individuals or families who have lived at their current address for more than 6 months
• those living in Western Sydney call 9832 2300, Lithgow call 6352 2077 or Bathurst call
  6332 4866.

Charities

The Salvation Army is one of the largest providers of material aid in Australia, through more than 260 community services centres nationwide. This may include assistance to families with:

• cash/cheque
• food vouchers/ food parcels
• clothing
• furniture and other household items
• accommodation vouchers
• housing cost
• electricity, gas, rates and other bills
• public transport fares
• medical and educational expenses
• other forms of help as appropriate to the individual.

To find your local Salvation Army Community Service Centre contact 1300 363 622. Other charities which may also provide assistance are:

Josephite Foundation – Lithgow
Tel: 6352 2077

Riverside Lifehouse NILS® – Dubbo
Tel: 6884 5540