A CAP on the amount that payday lenders can charge their customers has been welcomed by a local credit union.

New rules, which will come into force in January, will mean lenders will no longer be allowed to charge exorbitant rates of interest.

Ness Davies, spokesman for the Haven Credit Union, based in Milford Haven, said she was delighted with the news, and hoped it would help "counteract spiralling debt".

"But, if it means there will be fewer regulated lenders in the market we are worried that people who need to borrow money will end up borrowing from unregulated lenders including loan sharks," she said,

"This is the time that people really need to know about credit unions and understand the benefits of becoming a member."

Credit unions are run by people who believe in self-help and helping each other and are regulated by the Financial Conduct Authority (FCA), the body responsible for introducing the new cap.

Haven Credit Union operates in Pembrokeshire and anyone living or working in the county is eligible to join.

"There are two routes to borrowing money from the credit union," said Ness.

"The first is join and start saving today and in 13 weeks you will be able to borrow three times your savings, with no need for a credit check.

"The second is join the credit union today and apply for a loan straight away - we will do a credit check, credit score and affordability check.

"If you join today you will have access to credit union loans with a maximum interest rate of 26.8% APR - which equates to 2% a month on the declining balance.

"For example if you borrow £500 and repay it over 1 year you will pay £10.84 a week and repay a total of £63.55 in interest."

This compares to paying up to 292% APR on a payday loan, even with the cap introduced.

Haven Credit Union, on Charles Street, is open every morning, including Saturdays, until 12.30pm.