HARRISBURG, Pa. (9/16/13)--Nearly 71,000 short-term loans have been issued in Pennsylvania though the Credit Union Better Choice since the program was launched in 2006, the Pennsylvania Credit Union Association reported.
Roughly, 67 participating credit unions issued 70,877 loans totaling more than $34 million since the program's inception, PCUA said. The program has saved borrowers about $25 million over using a traditional payday lending product.
"The ongoing growth in the number of loans issued is indicative that consumers still need an alternative to payday loans to meet their financial needs," said PCUA President/CEO Jim McCormack.
The Credit Union Better Choice loan is a payday lending alternative product through which credit unions offer borrowers a 90-day loan with a $500 limit.
Members use the loans for Christmas gifts, taxes, car repairs, heating fuel, and funeral expenses.
The program was developed through a collaboration of PCUA, the Pennsylvania Treasury Department and the Pennsylvania Department of Banking and Securities.
A typical $500 payday loan costs consumers $15 for every $100 borrowed for two weeks, or about $450 over 90 days. A $500 Credit Union Better Choice loan costs consumers roughly $42.50 for 90 days. What's more, at the end of the loan term, the consumer has $50 in a savings account. The program builds the wealth-building component by providing financial education to help members make better informed financial decisions.
Pennsylvania consumers saved an average of 80 cents in loan fees and costs for every dollar borrowed through a Credit Union Better Choice loan rather than through a typical loan from a payday lender. That translates into more than $25 million consumers kept in their pockets by using the loans.