Credit unions launched a campaign today warning people about the risks of rogue loan sharks preying on the vulnerable over the months in the run-up to Christmas.
The Irish League of Credit Unions (ILCU) warned that some lenders were legally charging almost 200 per cent interest on borrowings while illegal lenders were charging considerably higher rates.
It has rolled out its Keep The Wolves From The Door This Christmascampaign to encourage people needing cash to talk to credit unions before taking out loans
ILCU president Uel Adair claimed moneylenders often "gloss over" the high costs involved in borrowing.
"People are legally being charged up to 188.5 per cent interest on such loans by legal moneylenders -and even worse by illegal moneylenders," he said.
Minister for Social and Family Affairs Martin Cullen gave his backing to the campaign and urged those with money problems to seek out sound advice.
"People who are anxious about the issue of debt in the run-up to Christmas can get advice from their local Money Advice and Budgeting Service (MABS) office or contact their credit union for competitive loan advice," he said.
The campaign follows research by University College Cork's Centre for Co-Operative Studies, which shows high numbers of welfare claimants were turning to loan sharks.
The study revealed almost four out of every 10 people at post offices on welfare payment days were indebted to lenders. Around 80 per cent are either currently borrowing or have borrowed in the past from moneylenders, according to the survey.
Of the 253 people who took part in the survey, 38 per cent were unemployed and of these 33 per cent are currently borrowing from moneylenders. Of those borrowing from moneylenders, a third are also borrowing from a credit union and 13 per cent are borrowing from a bank.
Credit unions will issue Christmas "survival guides" with top tips on how to get the best out of Christmas shopping with a free budget planner.