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TORONTO – There seems to be no limits to the growth potential for payday lenders and so by getting involved in these types of products-credit union style with lower rates and fees-credit unions can provide a valuable service to their members and establish a good book of business and grow membership as well. Take a look at some payday lending trends according to The Center for Financial Services Innovation, an affiliate of ShoreBank Corporation: * grew from 7,000-10,000 outlets in 2000 to 23,000 by 2005; * increased transactions from 41 million to over 100 million in the same time while growing fee income from $1 billion to $6 billion; * 75% of payday borrowers roll over their loan at least once; * 91% of payday loans are made to borrowers who get five or more loans per year; and * payday lenders have a “disproportionately large presence” near military installations. Credit unions already have the existing staff and infrastructure to make these types of loans given their business, Jennifer Tescher, director of the center, said. They can also minimize losses by linking loans to direct deposit and automatic withdrawals. Additionally, the more advantageous terms and structure provide credit unions a competitive advantage. However, making financial counseling a requirement has gotten “very mixed reviews,” she said, sometimes turning potential users away from the product. While offering payday loans, credit unions can also transition their members to other products and help them avoid the constant debt cycle.

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