WASHINGTON — Two community development credit unions testified last week on how they are battling predatory lenders to educate their members on better financial options.

North Side Federal Credit Union CEO Ed Jacob and Faith Community United Credit Union CEO Rita Haynes provided testimony on the alternatives they are offering members to steer them away from predatory lenders during the March 21 Domestic Policy Subcommittee of the House Oversight and Government Reform Committee hearing entitled, "Foreclosure, Predatory Mortgage and Payday Lending in America's Cities."

Jacob explained that his credit union developed its Payday Alternative Loan (PAL) with assistance from public and private partners, including the NCUA, the Community Development Financial Institutions Fund, as well as local banks for financial and technical support. The $500 loan is 16.5% for a six-month term, which was designed to get members away from rolling over their small dollar loans. "Realistically, few borrowers have the ability to re-pay the entire loan after two weeks or one month–so they begin to be caught in the trap of an ongoing cycle of debt," Jacob said.