Mary McGoldrick: Dalmuir Credit Union

Millions of people are in the middle of their Christmas shopping and with interest rates low many have been tempted to borrow to pay for their activities and purchases over the festive period.

Consumer credit has risen by 55% in the past five years, driven by aggressive competition between lenders.

However, the inability to pay off loans is driving hundreds of thousands of Scots into a spiral of debt.

The Citizens Advice Bureaux Scotland (CAB) service said one way to protect those who can ill afford to borrow is to extend the system of social loans.

Competitive rates

Credit unions have operated successfully throughout the UK and the not-for-profit organisations can offer borrowing at cheaper rates than high street banks, as well as competitive rates for savers.

Last month, CAB warned that the public needed better protection from consumer credit rip-offs.

The consumer body said those on lower incomes often suffer the most and has called on the government to introduce a system of affordable "social loans".

CAB has warned of spiralling debt

Irresponsible lending has led to mounting financial problems for many Scots, the body claimed.

Dalmuir Credit Union's Mary McGoldrick was at the opening ceremony for the new bank building on Monday.

She explained how the credit union was run: "We are self-supporting and we are a community-based credit union, it is owned and run by its members.

"We offer low interest, 1% a month on a reducing balance."

There are only a small number of credit unions in the UK, compared with other countries such as the Republic of Ireland.

Ms McGoldrick admits that unfavourable government legislation has made survival hard.

"There was legislation brought in in 1979 which put quite a few restrictions upon us. But the government is now coming round to our way of thinking and are now removing some of those restrictions.

"Hopefully, we will be able to go forward in the future," she said.