A Preston credit union is set to be bank rolled by the city council.

Blackpool Fylde and Wyre Credit Union have been invited to expand their services into Preston, potentially being based at the Town Hall.

They already serve over 3,000 people in and around Blackpool, but need council help to expand into Preston.

Credit unions offer an alternative to traditional banks and payday loans, which have been popping up online and on the high streets across the UK.

Branded GuildMoney, the city council say the lender would help tackle financial exclusion and provide a sustainable co-operative business.

Councillor Matthew Brown, cabinet member for community engagement and inclusion, said a credit union would offer a different way of lending money for the city.

He said: “A lot of other cities and towns in Lancashire have access to a Credit Union. In recent years we have seen a proliferation of payday lenders, doorstep lending and to a lesser degree loan sharks.

“People have a right to access affordable credit and be encouraged to save for the long term. The new Credit Union will help people do this.”

GuildMoney would initially be offered to employees of the council, UCLan and local colleges before offering services to the wider community in 2015.

Cllr Brown said: “Credit Unions are democratically run financial cooperatives. They also pay a dividend on savings meaning the savers who invest their money in the union have a share of the profits and success of it.

“Following the collapse of the financial system there is a growing movement in this country and elsewhere to look for alternatives to the current way of doing things.”

£150,000 is earmarked to be invested by the city council over the next two years, with £50,000 being put in upfront.

The remaining £100,000 will follow after being reallocated from the Capital Asbestos Reserve and used to buy deferred shares in the credit union.

A member of the council would serve on the board of credit union.

The investment comes as the city council looks to find savings of £3.6 million over the next three years.

Cllr Brown defended the investment, saying it was a key manifesto pledge of the Labour group when it took power at the Town Hall.

The plan for the credit union will go to the city council’s cabinet meeting on Wednesday. You can read the full plan for the credit union on the council website.

What’s your view? Should the council be investing in a credit union? Does Preston need one? Would you use it? Let us know in the comments below