Sequestration: Credit Union Emergency Loans Becoming More Popular
Add Associated Credit Union in Atlanta and Service Credit Union in Portsmouth, N.H., to the growing list of cooperatives offering loans to members who are likely to feel the impact of the sequestration cuts the most.
The $1.2 billion Associated CU said it will offer its 0% interest Federal Employee Relief Loan for an amount equal to the difference between the member’s last direct deposited paycheck and the paycheck after the sequester cuts. The aim is to provide an interest-free money stream while members are receiving a reduced government paycheck, according to the credit union.
Associated CU said it will also waive penalty fees on withdrawals from certificates of deposit owned by members who are federal employees.
“Since 1930, our core membership base has been federal employees. We intend to stand shoulder to shoulder with our members if and when we are needed.” said Lin Hodges, president/CEO of Associated CU.
The $2.2 billion Service CU said it will also offer a 0% sequestration loan up to $6,000 with repayment over 18 months with no payments for the first 90 days for members with existing direct deposit.
For those members who have been furloughed, they can withdraw from a current CD without any penalties as well defer payments on a current loan for 90 days, according to Service CU, which added that although federal government workers will still be employed, they will not be paid 20% of their salary.
“It will be difficult for many who are furloughed to comply with their financial commitments without some additional aid, which we will provide,” said Gordon Simmons, president/CEO of Service CU.
Since 1957, the credit union has served the U.S. military and all Department of Defense civilian personnel, Simmons said.
Since the sequestration budget cuts went into effect on March 1, a number of credit unions have started offering loans and other services to members who will be impacted.