It is supposed to be a time of festive cheer but Christmas, and all the spending pressures that come with it, may bring only misery for thousands of Scots in financial trouble.

Recent research showed that nearly half of Scottish households already had some form of personal debt, besides a mortgage or student loan, before they had even spent a penny on presents, food and decorations this month.

Moreover, 17 per cent of Scots admitted to feeling worried and stressed about how much they have borrowed, with six per cent feeling trapped in a cycle of debt.

The findings come from research commissioned by Scotwest Credit Union and the social enterprise Scotcash, which have clubbed together to offer affordable loans to vulnerable consumers at this costly time of year.

The organisations warned that desperate customers could turn towards high-cost lenders to fund the festive season, as separate research from the Debt Advice Trust has shown that a third of the population will be putting Christmas on credit this year.

Some 100,000 people in Glasgow alone could end up turning to non-mainstream lenders, according to Glasgow City Council.

Sharon MacPherson, chief executive of Scotcash, said: “Many people are shut out from the best interest rates when they need it most, and this means they can be taken advantage of, being lured into taking out high interest loans or expensive credit cards to pay for Christmas.”

Scotcash and Scotwest Credit Union have teamed up with ASDA, a new entrant in the supermarket banking sector, and other credit unions across the UK to launch Affordable Loans – a website that offers fair loans for those with poor credit ratings or no previous record of borrowing.

This could also be a much-needed lifeline for a frequently neglected demographic in the credit market - young workers. A report from employee benefits firm SalaryFinance and the charity Toynbee Hall recently highlighted how millennials are excluded from fair terms on credit just when they need it due to their lack of borrowing history, making them more likely to turn to the kind of high-cost options that will exacerbate their problems.

Karen Hurst, policy officer at the Association of British Credit Unions Limited (ABCUL), said credit unions had to be part of financial education in order to prevent these problems.

“The prevalence of consumer debt and the massive growth of online lenders, gambling sites and a whole host of easy ways to lose your money means there’s a more important place than ever for institutions – like credit unions – that promote financial awareness, good money management, regular saving and responsible borrowing to bring that message to young people in schools,” she said.

ABCUL, which hosted its annual conference in Glasgow this week, published a charter aimed at making Scotland “a credit union nation” earlier this year, including a call for every school to have a credit union champion. The Scottish Government pledged almost £200,000 this year both to help credit unions set up partnerships with local schools and to develop a junior savers toolkit.

Ms Hurst also dismissed fears that credit unions are wrongly advertising their services as a quick fix for cash flow problems around Christmas after the Scottish League of Credit Unions previously warned about the dangers of members treating it as an alternative to payday loans.

Ms Hurst said: “There are many instances of people who joined a credit union because they needed a loan and then developed a savings habit and a much healthier approach to their finances, which meant the need for emergency credit became a thing of the past.”

Gareth Evans, co-director of the Financial Inclusion Centre (FIC), said easily accessible loans act as a “gateway” into credit unions. The FIC launched the Wee Glasgow Loan in association with Pollok Credit Union in late November and 3,000 applications were made online in the first three weeks alone.

Mr Evans said: “We want to move people away from high-cost lenders by offering some of the characteristics that make them so attractive, such as being able to apply online 24/7, having a simple application process and faster, if not instant, decisions that enable people to get hold of the money quickly.”

To qualify for the loan, applicants must to live or work in the Glasgow G postcode area, earn over £9,000 a year and have a bank account with a debit card, but there is no need to be an existing member of Pollok Credit Union.

The loan typically charges 26.8 per cent APR (or two per cent a month up to 12 months) on amounts of up to £400. Terms on Affordable Loans from Scotwest Credit Union are available on individual application – but the maximum legal rate that credit unions can charge is 42.6 per cent. Even on this rate, it would be £300 cheaper to borrow £500 over a year from a credit union (costing £597.02 in total) than it would be to borrow the same from lending giant Provident Financial (costing £910 in total) due to its higher APR of 272.2 per cent.