Parents going hungry to buy toys
Parents are going without food so they can pay money lenders to cover Santa presents, according to St Vincent de Paul.
The charity receives about 130,000 calls for assistance annually and most of these households have resorted to using moneylenders.
“The most important thing is to have a Santa present, and people go to the money- lender in order to have that in place,” said Kieran Stafford, the national director of St Vincent de Paul.
“Food is the variable, people can play around with that. You can’t play around with rent or electricity. We’ve seen parents not eat.
“It’s both low-income and working people that are using them, and for big events like communions, confirmations, a birthday and then Christmas.”
About 350,000 people in Ireland are using regulated moneylenders, with one of the most well-known companies charging an interest rate of 187%.
“It takes huge budgetary skills to manage on a low income and if you throw in any extra expense, it becomes unmanageable and that’s where they turn to moneylenders,” said Mr Stafford.
While Christmas causes the most pressure of these extra expenses, it is an expense many parents are willing to take on so their children do not miss out on the Christmas experience.
“At Christmas, people just want to provide a normal, half-decent Christmas for their kids,” said Mr Stafford. “One of our service users asked: ‘It’s okay to create memories for our children, isn’t it?’
“In these situations people feel they have no other option but to turn to money- lenders.”
The reason people will prioritise the repayments to a moneylender, as opposed to covering grocery shopping, is to avoid closing off the only access to credit available to them in crisis situations.
“It’s estimated that there are 102,000 working poor in Ireland — people who have to work part-time because they have to work around childcare and one-parent homes,” said Mr Stafford.
“They’ll prioritise the moneylender because they see them as the only line of credit, knowing they’ll have to turn to them again when the washing machine breaks down or when there is a communion coming up.”
The Central Bank has recently approved another moneylender, bringing the total number of high-cost loan companies in the regulated market to 39.
Another reason people prioritise repayments to the moneylender is down to the manner in which the monies are collected by these regulated lenders.
“Moneylenders knock on doors, people come around, they know where you live and they collect every week. It’s based around the old concept of doorstep credit,” Mr Stafford said.
He gave a breakdown of what an average loan is costing people with one of the most popular money- lenders.
“One of the more well-known money lenders, who is one of the regulated guys, has an interest rate of 187%,” said Mr Stafford. “This can go over 200% with collection rates and if you missed a week.
“So if you borrow €500 from one of the well-known moneylenders, that loan will cost you €780 to repay over a year.”
However, it is not just parents who are struggling; grandparents are affected as well,” said Mr Stafford.
“There are grandparents who are struggling on social welfare payments and the State pension, and they want to be able to provide presents for their grandkids,” he said.
“There is nothing unusual in us giving presents to grandparents to give to their grandchildren.”
Mr Stafford said that the leading cause of this poverty and high financial pressure is coming from the housing crisis.
“Rents are creating horrendous problems for people,” he said. “They’re soaking up their incomes and people are finding it difficult to provide a normal Christmas for their families.
