SPRINGFIELD, Mo. (1/11/16)--CU Community CU, Springfield, Mo., will roll out a more affordable alternative to payday loans early this year to provide much-needed relief to members struggling in the payday loan debt cycle.
The Fresh Start Loan Program will be funded through a $1,988,750 U.S. Treasury grant, which CU Community earned through itsstatus as a community development financial institution.
"There are many people in Greene and Christian countieswho are drowning in debt, and they turn to other costly solutions to solve short-term liquidity problems," saidJudy Hadsall, CU Community CU president/CEO. “Our hope is that we can help fill in the gaps where other financial products haven’t been able to provide assistance and create a lasting impact for people’s financial well-being."
The need for credit building and debt consolidation to reduce the burden of poverty is greater in Springfield than almost anywhere in Missouri. Roughly 26%of Springfield residents live at or below the federal poverty level. Despite relatively low unemployment rates, the Federal Reserve has designated the community as in “severe fiscal distress” due to the high incidence of poverty.
According to the Missouri Division of Finance, nearly 2million payday loans were issued in Missouri from Oct. 2013 to Sept. 2014. The average amount of each loan was nearly $310 and the average annual percentage rate (APR) was almost 452%. Payday loan borrowers in Missouri can roll over their loans up to six times, but each time they do so, additional fees accrue.
“Our Fresh Start Loan Program provides members access to small, short-term loans with reasonable rates and fees,” said Hadsall. “Our financial specialists will work with members to determine if this product is the right fit for their situation and to help them consolidate their existing payday loans so that they get out of the debt cycle faster.”
Participants can enter the program with no credit check. CU Community CU will provide access to mainstream banking services such as checking accounts with debit cards, online and mobile banking, and a network of nearly 30,000 free ATMs nationwide.