Waltham Forest’s Community Credit Union (WFCCU) has become one of just two in England to offer an instant loan service as an alternative to controversial, high-cost payday lenders.
The new credEcard enables the not-for-profit organisation to issue members with a disposable Visa debit card, which provides loans up to £1,000 for first-time users.
Prior to this, members would recieve money by cash, cheque or bank transfer, with many users waiting days for loans to clear by cheque as they do not have bank accounts.
The service has been launched as the Financial Conduct Authority takes over regulation of the credit and debt management sector.
It has promised to clampdown on firms charging extortionate fees and the risks of borrowers being forced into a cycle of debt, with a quarter of lenders expected to be forced out of business.
Lenders have defended their practices, saying loans are given out responsibly with many customers paying them back on time.
WFCCU hopes to offer the service from pop-up shops across the borough by the end of the year.
Walthamstow MP Stella Creasy has welcomed the new, cheaper alternative to borrowing money.
She said: "It's great to see our credit union movement being so creative in trying to address the causes of debt in our community.
"Offering more people opportunities to borrow in an affordable way and to be able to avoid the legal loan sharks is vital to helping them manage the pressure on their finances given the high cost of living in London.
"As sharkstoppers we will continue to push for tougher legislation to tackle these companies at a national level and do everything we can to support residents being able to use the credit union locally too."
The scheme is only also available in Riverside, Liverpool.
Monthly interest on the loans are between one and two per, but the WFCCU chief executive, Michelle Howlin, said they can vary depending on individual circumstances.
She added: "Now there is an ease of accessibility our members never had before. The new ecard enables us to get money into the hands of people that need it straight away.
"Doing this helps us to deter our members from using less ethical providers, like payday lenders and logbook loan companies.
"This, coupled with the high levels of governance which oversee the Credit Union industry, make the services we offer an altogether better proposition for our members than the 'instant cash' market."
WFCCU is self-sustainable and receives its funding from savings deposits, interest from loans and the one-off membership fee of £5.
In order to receive the pre-paid card, an application must be filled out at the WFCCU office in Church Hill Road, Walthamstow.