A CREDIT union that will provide savings and credit for people has been launched in Durham.

People who live or work in the city can join the community-run co-operative, which is a non-profit organisation offering basic banking and financial services.

Credit unions are growing in popularity, encouraged by the Government, which sees them as helping to tackle social exclusion.

Members who save regularly with a credit union can borrow money from it and interest rates are capped at one per cent a month.

Although bank loans are currently cheaper, many credit card annual rates are 18 or 19 per cent and finance firms which target poor households charge an annual rate of between 100 and 500 per cent.

The organisers of the Durham City and District Credit Union believe the organisation will help poorer people in the city as well as the more affluent.

Tony Tribe, a member of the union's compliance committee, said: "The Government is keen on credit unions because they extend to people whose credit-worthiness rules them out for bank loans and who have to depend on providers who charge a lot of money.

"We cannot charge more than one per cent a month on a reducing balance.

"People establish their credit worthiness by saving over eight to ten weeks and then we can give them a small loan, say £50.''

The union will be open at Community House, Holly Park, Ushaw Moor, each Wednesday from next week, from 10am to noon.

It is looking for volunteers to help with its operation. Anyone interested is asked to call Mr Tribe on 0191-384 9133.