Langley FCU Quantifies Savings From Payroll Alternative
NEWPORT NEWS, Va. - Members of the $1 billion Langley FCU have saved over $230,000 over the past year by participating in the credit union's QuickCash Program over what they would have spent with payday lenders in their areas, the credit union has said. Typically, payday lenders charge a fee of 15% of the amount borrowed, the credit union explained. For example: if a customer borrows $500 they will be charged a $75 fee. For a two week period, that $75 fee translates into an equivalent annual percentage rate of 390%. If an LFCU member gets $500 through a QuickCash Loan, the interest would only be 18% APR, and instead of paying $75, he/she would pay only $3.48 in interest over that two week period. "Payday loans and their associated fees were a major source of financial problems for a number of our members, particularly those serving in the military," said LFCU CEO Jean Yokum. "We're glad this service is helping them and the community." Brett Noll, senior vice president for the credit union said that roughly 2,500 of the credit union's members have used the program over the past year and that loans are available between $500 and $1000. The credit union will let a member repay the loans over 31 days but tries to have the members repay the loans the next pay period. Members need to have a job and direct deposit, along with a credit score of at least 550 in order to participate, Noll said. He also said that the credit tries to work with members who turn out to be repeat users of the loans and counsel them to help build savings or use another credit vehicle in order to keep away from the short term loans.