Virginia Credit Unions Offer Payday Help

Wow...it's been awhile. Holidays. Work. School. Eeek. Time is money.

I came across this in the Washington Times newspaper. It spotlights how credit unions are picking up where payday lenders have left things a bit untidy:

"Mr. Noll's Langley Federal Credit Union is one of a growing number of credit unions, churches and nonprofit organizations that are providing low-cost cash advances as states, including Virginia, grapple with a growing payday loan industry and those left drowning in debt because of it."

And the reason behind the action:

"A credit union typically, almost always, will have the person's best interest in mind as opposed to making a profit off the person," Mr. Noll said. "We're a not-for-profit organization, and we truly exist to provide good service and act in the best interest of our membership."

Read the entire story here.

Kansas Credit Unions Offer Payday Alternatives

Click your ruby slippers together and repeat: "I want to get out of this payday trap...I want to get out of this payday trap..."

Dorothy's magical slippers may be a fantasy, but financially-buried folks in Kansas are following the Yellow Brick Road to local credit unions. The cooperatives now offer alternatives to payday loans, says one credit union leader in the Dodge City Daily Globe:

There are a lot of folks who come in and take a payday loan and, for whatever reason, get caught in the trap of not being able to pay that loan. Our goal as a credit union is to help folks who are caught in that situation and show them there is a better way to borrow, a better way to handle their finances, and help them to become good members of our credit union for the rest of their lives.

And Toto, too! Click here for the online story.

Credit Unions Lead, Banks Need Coaxing in Payday Alternatives

Public Radio's Marketplace reports credit unions are trying to help ween people from the perils of payday loans, while reluctant banks need additional coaxing. Read:

Faith Community United is one of a small but growing number of credit unions trying to give payday lenders some competition. Now the FDIC wants more banks to jump in to the race. The FDIC's Bob Mooney says that's why the federal agency released guidelines earlier this summer for the type of payday loan they'd like banks to offer: Small, one-month loans capped at a 36 percent annual percentage rate.

Meanwhile, the bank regulator, the Federal Deposit Insurance Corp. (FDIC) is encouraging banks that it supervises to offer affordable small dollar loans to these customers.

To entice banks, the FDIC is offering extra credit at exam time. Every year banks have to show they are trying to meet the federal Community Reinvestment Act by doing business in the rich and poor parts of their neighborhoods. Banks that offer small dollar loans that follow the guidelines will get "very favorable" consideration in their annual reviews.

I guess we can't blame the banks for not looking out for the little guy. Unlike credit unions, it's not a natural bank tendency for the for-profit fellows.

Another stark contrast between banks and credit unions.

Read (and listen) to the complete segment on the Marketplace website.

NPR: Credit Unions Seek Payday Loan Consumers

National Public Radio's (NPR) "Morning Edition" reported Oct. 15 on credit unions' efforts to help consumers avoid payday loans with high rates.

NPR host Steve Inskeep noted that "a growing number of credit unions hopes to steer consumers who are strapped for cash away from payday loans by offering less expensive alternatives."

Reporter Cheryl Corley interviewed a woman who had used payday loans, and Ed Jacob, CEO of the North Side Community Federal Credit Union in Chicago.

Jacob explained the credit union began offering payday loan alternatives after noticing members were paying interest fees of more than 600% on payday loans. Its short-term loan is for $500, at 16.5%, and is to be repaid in six months.

Click here to read the NPR story online.

In Payday Battle: Banks AWOL, Credit Unions Get Praise

Credit unions deserve recognition for stepping up to help low-income households obtain small, low-interest loans, the Virginian-Pilot reported in its Oct. 8 edition.

The Pilot cited two credit unions, Langley Federal Credit Union in Hampton and Newport News Shipbuilding Employees Credit Union, who have offered small loans with lower interest rates to members.

Many low-income Virginians have been left behind by banks, so payday lenders "have slithered in to fill the void," said the article. Some lenders charge more than 300% interest on the loans, burying borrowers further into debt.

Newsweek: Credit unions 'the most promising solution'

Jane Bryant Quinn's column about payday lending appears in today's Newsweek.

While credit unions aren't mentioned till the end of the piece, she speaks of credit unions in very favorable terms, calling them "the most promising solution," and highlighting alternative payday programs at a handful of credit unions.