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WATERLOO, Iowa — To stop what some critics consider a vicious and exorbitant trap found with many payday loans, Veridian Credit Union is launching an alternative that not only provides emergency cash, but helps users save for the long term.

Starting March 1, the $1.1 billion CU will offer its Payday Alternative Loan. The PAL is a loan up to $1,000 and a repayment term of up to six months. The most distinguishing factor of the PAL is that a savings account is also established as part of the process. When an individual requests a PAL, the amount requested is automatically doubled. For example, if an individual requests $500, the loan amount would be for $1,000. The additional $500 would be deposited into the borrower’s savings account and held until the loan is paid in full. Both the repayment term and the savings component allow individuals to break the cycle of constantly renewing a loan.

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