International Credit Union Day – a safe alternative to loan sharks

When we spoke to Cath Wohlers from Stop Loan Sharks, she recommended credit unions as a safe, fair alternative to illegal money lenders.

So, to mark International Credit Union Day (16 October 2025), we’re taking a closer look at what credit unions are, why they can be a lifeline when money’s tight and what to do if you’ve already been caught in a loan shark’s net.

But first, let’s wade into those murky waters and look at what makes a loan shark so dangerous.

What exactly is a loan shark?

Cath sums it up simply:

“Loan sharks are not authorised, probably won’t give paperwork, couldn’t tell you the interest rate they’re going to charge, and operate outside the law.”

Borrowing from them is a risky business. Without legal protections or clear repayment terms, people can quickly find themselves trapped, paying back far more than they borrowed.

And when repayments stop, maybe because of job loss, illness or a family breakdown, things can turn nasty.

Why would anyone borrow from a loan shark?

Many people don’t realise they’re dealing with a loan shark until it’s too late.

Cath describes how a loan shark might sidle up to someone and say something like:

“‘Oh God, I've just heard you moaning about the washing machine. I remember what it's like when I had young kids, and you need that washing machine… If you want to borrow £400 off me, pay me back when you can.’”

At first, it feels like a favour from a friend. But before long, the tone changes:

“‘No, no, this is an agreement. I don't do this for nothing. What did you think you were getting into?’”

That’s when the pressure starts.

Are all loan sharks the same?

Not exactly, but Cath says they all have one thing in common: they’re bullies.

“They'll find out what's important to you and threaten it in some way… It's 150 text messages a day. It's hammering on the door at 5am and scaring the kids. It's following you to school.

“There are very rarely explicit threats. A lot of it's implied. It's like a horror film; if there's a noise off-screen and something that you don't see, that's worse. That's more scary.

“And I think that's what they rely on; they plant mental seeds in people's brains and then watch them grow into absolute terror.

“We've seen people pushed to the brink of suicide.”

If any of this sounds familiar, there is help.

Read our guide for the red flags that suggest you’re dealing with a loan shark and what to do if you’ve already borrowed from one. 

What’s a credit union?

Credit unions are community-based financial organisations that exist to benefit their members rather than to make profit.

Members save together so they can offer each other fair, low-interest loans.

The members of a credit union will share something in common – for example, they might:

• live in the same area
• work for the same employer
• belong to the same community group 

Why credit unions are a safe alternative

Credit unions are authorised and regulated, which means your money is protected.

Cath explains that credit unions can be a good alternative to loan sharks because, as well as offering low interest rates, they don’t encourage people to borrow more than they need.

“We promote credit unions as a safe place to borrow, and they will typically do the lower amounts of loans. Big organisations sometimes don't want to lend small amounts of money even if you have got a brilliant credit rating, so we promote credit unions as the alternative.”

Other options if you’re struggling for cash

If you’re not already a credit union member and need help fast, there are other ways to get short-term support.

Read our guide on emergency funding for details of grants, benefits and other safe sources of help.

When borrowing isn’t the answer

While credit unions can be a great option, borrowing isn’t always the right solution, especially if you’re already struggling with debt.

As Cath puts it:

“The better thing, if you’re borrowing to get out of debt, is to talk to someone like you guys [Money Wellness].”

We couldn’t agree more. If you’re feeling trapped by debt or don’t know where to turn, our friendly team offers free, confidential advice to help you find a way forward.