CU Payday Lending Alternative Effort Part of Television Program
CHICAGO - An interview with a member of the $9 million North Side Community FCU who has used the credit union's payday loan alternative product was paired with an interview with a representative of Chicago's payday loan industry in a program on WTTW, Chicago's main PBS affiliate station. The interviews appeared on Chicago Tonight, the station's leading news and public affairs program, on April 12. "Payday lenders did not exist in Illinois until 10 years ago," a show promotion noted. "Today there are more payday loan locations in the state than McDonald's restaurants. This thriving industry claims it offers small, short-term loans to its customers to help tide them over until their next paycheck. But critics contend that the payday lenders' high interest loans are putting low-income borrowers into significant debt." North Side FCU is a low-income designated community development credit union (CDCU) and was one of the first institutions in Chicago to offer an alternative to payday loans. Since starting the program, the credit union has helped many in the community get out of vicious debt cycles by offering members short term loans, which carry much lower interest rates and help them repay the steep fees accrued from payday lenders. "Our hope is that discussion of this issue will lead to the passage of a bill that will provide reasonable regulations and guidelines for payday lenders to follow," said North Side FCU CEO Ed Jacob. "Credit unions will continue to provide low-interest alternatives, but we cannot reach everyone. There is a real need for payday advance products, but there needs to be increased regulation for payday outlets to make these loans without stripping assets and wealth from low-income communities." Ed Jacob will be among a group of panelists at an April 27 seminar titled: Antidotes to Payday Lending, being organized by the National Federation of Community Development Credit Unions (the Federation). The one-day program will be held in St. Louis, Mo. and will run from 1:00 pm - 6:00 pm. It will include speakers from CDCUs; "mainstream" and military credit unions; and credit union industry research organizations working to combat these practices.