Bradford’s District Credit Union has reported double the amount of new members for January after the district’s biggest social housing group, Incommunities, offered thousands of tenants a cash incentive to join a credit union to try to safeguard their benefit payments.

There have been fears that the introduction of controversial Universal Credit in October, a new single payment, would lead to a spike in homelessness through rent defaults among people who have difficulty managing their budgets and put them at risk of loan sharks.

Incommunities has contacted more than 4,000 of its tenants to offer them advice about the controversial changes and promote membership of the district credit union with a free £10 savings start on new accounts.

Now the credit union has announced that take-up in January is double the expected target, although it would not reveal exactly what those figures were.

Credit union chief executive Andrew Bowker said it wanted to show there was an alternative to pay-day loans, which can charge huge interest rates.

“The take-up has been working very well,” he said.

“Our current membership is around 3,800 but this January the monthly amount has doubled. We achieved our target halfway through the month.

“The fact is if you need a loan and want to save, then the choice is easy.

“You can save through normal payments with no excessive interest rates and this is an alternative to doorstep lenders.

“We are not here to make a profit, we are here to offer loans and the maximum rate we charge is 26 per cent.”

Universal Credit means claimants will receive any support for their housing costs directly on a monthly basis, rather than having benefit paid direct to their landlord.

Steve Short, director of Incommunities, Open Field, said: “Our Open Field Service offers free money-management advice to customers which covers ways of keeping to a budget, prioritising out goings such as rent and utility bills, and where to go if you are facing debt problems.”