Credit card debt is haunting Portland, Ore., businesswoman Jackie Kauffman, but her bank has no solutions to offer other than late fees and added interest charges. She said she feels like her only option is to default.
“The recession hit me hard and I’ve done everything I can to be responsible with my money,” Kaufman said. “I never imagined I would be in such a bad place financially.”
Recently she heard about a new program – a way out of her financial mess, and she plans to become a member of the $915 million Unitus Community Credit Union in Portland to take part.
The program, Ultimate Payoff Loan, is designed to help members successfully reduce or eliminate credit card debt and become more financially stable.
“My sister is a member of the credit union and she casually mentioned it and I felt a wave of what I guess, was relief pass over me,” said Kauffman. “It’s not a magic bullet from what I understand, but it might be a way to get out from under this cloud of debt and finally get some sleep.”
According to Laurie Kresl, vice president of planning and business development, Unitus wanted to give members an in-house opportunity to educate themselves and improve their finances, as opposed to “going it alone” or seeking help from a debt management company.
“The best place for someone to get help dealing with debt should be their local credit union, not from a debt management company with whom they have no prior relationship,” Kresl said. “Educating our members and giving them the right financial tools and support remain top priorities for Unitus.”
According to Unitus, the average household credit card debt exceeds $10,000—that’s in addition to other forms of debt, such as mortgage, car and school loans. A $10,000 loan, however, can take as many as 30 years to repay if only minimum payments are made.
Unitus’ launch of its Ultimate Payoff Loan follows a successful pilot program conducted last year, the credit union said, in which participating members consolidated their loans and committed to steps that would help them get out of debt
To participate in Unitus' Ultimate Payoff Loan program, borrowers such as Kauffman with multiple credit card accounts must consolidate smaller balances into a short-term, fixed-rate personal loan, allowing them to accelerate debt reduction.
They must also commit to financial discipline by making minimum monthly payments on other credit cards and loans, applying any excess funds towards the Ultimate Payoff Loan, and avoiding additional credit card and other unsecured debt. Once the first Ultimate Payoff Loan has been fully paid, Unitus will continue working with committed members by providing additional loan consolidation until they are debt free.
“Our goal is to help our members achieve financial success through education and partnership. In some cases, this means helping them responsibly end the cycle of debt accumulation so they can continue moving forward in their lives,” concluded Kresl.