5 Ways to Help Members Cope With Sequestration
Since March, when the U.S. government's across-the-board budget cuts began taking effect, credit unions in communities filled with federal employees have stepped up to help members cope with the consequences of sequestration, especially income loss.
Department of Defense downsizing and other federal payroll cuts are creating financial hardship for many credit union members, especially military families, according to a recent survey by First Command Financial Services Inc. in Fort Worth, Texas.
“As their dedicated banking partner, we've been providing phone and in-person assistance to help them overcome any financial difficulties,” said Claudia Warszawski, a personal finance manager at the Vienna, Va.-based credit union, the world’s largest. “We're doing what we can to provide assistance, and encourage all current and potential members to contact us to review their options and seek relief."
In the past few months, more than 50 Belvoir Federal members attended free seminars topics such as “Taking Charge in Tough Times” and “It’s a Matter of Life and Debit” in recent months, the credit union said.
Offering emergency loans, loan workout options and skip-a-payment programs are effective ways for credit unions to provide a financial parachute for members trying to stay afloat during hard times, according to credit union leaders.
Penalty-free early withdrawals on certificates of deposit are another option many credit unions are offering to aid members undergoing furloughs.
For members that need to redeem a certificate of deposit prior to its maturity, some credit unions, including Navy Federal, are waiving early withdrawal penalties.
The $71 million San Diego Medical FCU is among the growing number of credit unions offering no-fee sequestration loans and other services. Through Sept. 30, 2013, according to the 5,100-member credit union's website, qualified members can tap into a sequestration loan program that offers:
- No origination fees
- $2,500 available during sequestration
- 0% APR (through Sept. 30, 2013)
- Repayment begins Oct. 1, 2013 at 6% APR
- 24-month repayment period
Loans aren't the only areas experiencing fee reductions. Navy Federal announced recently that it is offering a special 3% fixed-rate APR on checking overdraft line of credit through June 30, 2013 for federal government civilian employees that have direct deposit and are subject to furlough.