GRAND RAPIDS, Mich. (5/18/15)--A pair of credit unions were recently featured in a video that highlights the dangers of payday lenders in Michigan, and the alternatives consumers can rely on to avoid them.
The video, produced by the Community Economic Development Association of Michigan, includes interviews with several credit union professionals and features credit union products that can not only keep consumers from the pitfalls of payday lending, but also help them build credit and healthy savings habits.
Velvet Fuller, marketing director for the Grand Rapids-based AAC CU, talks about the Bridge Loan & Savings program at her credit union, a safe alternative to the payday loan.
“It’s designed to help employed individuals who maybe have damaged credit or have a life circumstance that comes, and they need access to reputable lending to help them keep going to work, so it’s not interrupting their ability to go to work,” Fuller said in the video.
The loan contains a savings element as well, she said, as $10 is added to each loan repayment. That extra cash is placed into a savings account that can be accessed when the loan is paid off.
The loan also requires financial counseling with a workplace coach before the loan is granted.
Later in the video, which will soon air on an episode of “The Bright Side TV,” Hank Hubbard, president/CEO of Communicating Arts CU, Detroit, discusses a product offered at his credit union called MyPay Today.
The payday loan alternative carries a two-month payback period and--because the credit union reports the loan repayments to credit bureaus--as the borrower pays back the loan, it rebuilds credit scores.
The loan product, which has a loss ratio of only 15%, costs the borrower 80% less than a payday loan, according to Hubbard.