Pennsylvania Payday Loan Alternative Nears $26 Million
Credit Union Better Choice said it has now made 53,714 loans totaling nearly $26 million through 79 participating Pennsylvania credit unions.
In addition, the program, launched in 2006, has saved borrowers more than $18 million over using a traditional payday lending product, its sponsors said.
The Credit Union Better Choice loan, which was developed through a collaboration of the Pennsylvania Credit Union Association, Pennsylvania Treasury Department and the Pennsylvania Department of Banking, is a payday lending alternative product where credit unions offer borrowers a 90-day loan with a $500 limit.
“The continued growth of the Credit Union Better Choice program indicates that consumers need access to short-term loans,” said Jim McCormack, president/CEO of the PCUA. “Through a voluntary program, credit unions across the Commonwealth are meeting the needs of their members.”
A typical $500 payday loan costs consumers $15 for every $100 borrowed for two weeks, or approximately $450 over 90 days, the PCUA said.
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 encourages them to develop a savings habit, program sponsors said.