"Because not-for-profit credit unions exist to serve members, not drive profits, a credit union offers loan terms in members' best interest," said Brett Thompson, president/CEO of the Wisconsin Credit Union League.
The bill scheduled to be introduced in the legislature would cap interest rates on consumer loans at 36%. Lawmakers have expressed concerns that payday lenders target low-income areas and the high interest loans has trapped consumers in debt.
Thompson said credit unions, however, have helped members with payday loan alternatives that not only typically cost less than half what nontraditional lenders charge but also encourage borrowers to begin saving, receive counseling and make better choices to transition into more traditional loan products offering lower rates. He said just a handful of credit unions pioneered payday loan alternative programs a few years ago, but now the number of credit unions offering such programs has grown more than eightfold, to more than 60.
A lobbyist for the league said this will be the second time the law has come before Wisconsin lawmakers, and he expected that it very well may do significantly better.
"There has been a sea change politically in the legislature since the last session," explained Tom Liebe, vice president for government affairs for the league. Democrats now control both chambers of the legislature and the governor's office and could very well be more open to legislation capping payday lending interest, he added.