SUITLAND, Md. — The $808 million Andrews Federal Credit Unionhas begun offering its members an alternative payday loanprogram.

The credit union began offering its “Cash to Go” to its membersin October 2007. The CU described the product as a “lower costalternative to those who rely on payday loan sorts of products themeet their cash needs” and added that the product's goal was not tomake money.

The product does not have any fees and does not require asavings or checking account, although the members are required tohave direct deposit with the CU or the member to show three paystubs as proof of employment.

Andrews members will be able to use the program to obtain ashort-term loan equal to a maximum of 75% of their standardpaycheck, the CU said.

Debbie Matz, former NCUA Board member and now actingpresident/CEO of Andrews, explained that the CU, which servesmembers of the military as well as residents of nearby Washington,D.C., felt the need to start offering the product after Washingtoncapped payday loans at 36%, a factor that payday lenders have saidwill force it to leave the city.

“We recognized a need for this product and wanted to help in anyway we could,” said Matz, who added that the product has provedpopular so far although there was not yet enough information to geta sense of whether it was costing Andrews money and, if so, howmuch.

Meanwhile, payday lending in the neighboring state of Virginiagot a lease of life in a tentative legislative compromise in theHouse of Delegates.

Opponents of the controversial industry had tried to restrictpayday lenders to changing 36% interest on their typically two weekloans, a move which the industry said would result in their beingchased from the Commonwealth.

The compromise that Virginia lawmakers have brokered still capsthe loans at 36%, but allows the lenders to continue charging fees,according to published media reports, and increased the maximumtime permitted to repay the loans from two to four weeks. Thelegislation would also cap the number of payday loans an individualcould have to no more than five per year.

Observers noted that the legislative compromise only applied tothe House of Delegates and the legislation still has to movethrough the Senate.

Lobbying in favor of payday lending in Virginia drew particularCU attention after a contract lobbyist for the Virginia CreditUnion League was also found to be lobbying for the payday lenderstrade association. Navy Federal Credit Union disassociated from theleague after it refused to drop the controversial lobbyist.

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