Pennsylvania Credit Union Association
Low-Cost Small Dollar Loans Available
HARRISBURG — Bills, car repairs, traffic fines, and even funeral expenses are just some of the uses cited by borrowers receiving a Credit Union Better Choice loan. Credit unions through this payday loan alternative have issued more than 20,000 loans totaling more than $9.3 million dollars since 2006. More importantly, $6.7 million dollars were saved by consumers over using a traditional payday lending product.
Since the program’s inception, 82 credit unions with 215 locations have agreed to offer Credit Union Better Choice loans, with additional participants continuing to sign on. During the first six-month cycle (Jan 1- June 30) of 2009, 5,291 loans totaling $2.5 million dollars were issued. The Credit Union Better Choice program is offered through participating credit unions and is a partnership of the Pennsylvania Credit Union Association and the Pennsylvania Treasury Department. To learn more about the program and a view a list of participants, visit www.PaCreditUnions.com.
“When consumers are in need of cash, credit unions have stepped in to fill this void with affordable short-term loans,” said Jim McCormack, President/CEO, Pennsylvania Credit Union Association. “Also, the credit unions are offering financial coaching to borrowers to help them in budget and manage money.”
“Just like the Pittsburgh area residents I met earlier this year, other hard-working Pennsylvanians from time to time need quick access to cash for an unexpected expense or to make ends meet between paychecks,” Treasurer McCord said. “Since the program began, Pennsylvanians have used more than 20,000 Better Choice loans, and in the process were spared nearly $7 million in interest charges and fees.”
A typical $500 payday loan costs consumers $15 for every $100 borrowed for two weeks, or approximately $450 over 90 days. A $500 Credit Union Better Choice loan costs consumers approximately $42.50 for the same 90 days and at the end of the loan term, the consumer has $50 in a savings account, which allows them to develop a savings habit. In addition, the program builds upon this new wealth-building component by providing financial education to consumers in an effort to help them make better informed financial decisions.
Pennsylvania consumers saved an average of 80 cents in loan fees and costs for every dollar borrowed through a Credit Union Better Choice loan rather than through a typical loan from a payday lender. This translates into more than $6.7 million that consumers kept in their own pockets by using credit unions that offer Credit Union Better Choice loans. In addition, borrowers were able to place $937,281 into savings accounts for future needs.
Total Number of Loans Issued (10/19/06-6/30/09): 20,067
Total $ Amount of Loans Issued: $9,372,815.97
Total $ Amount of Consumer Savings vs. Payday Lender: $6,748,427.20
Average Loan $ Amount: $467.08
Credit unions are financial cooperatives that provide affordable financial services to help their owner/members. The Harrisburg-based Pennsylvania Credit Union Association is a trade association that provides legislative, promotional, educational and operational support for more than 500 credit unions in Pennsylvania. These credit unions have assets in excess of $29 billion and serve nearly 3.5 million members. For additional information about credit unions or to find a credit union near you, visit www.ibelong.org
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