MADISON, Wis. (10/7/13)--The federal government's shutdown entered its second week with more credit unions pledging their assistance to members--and nonmembers.
"We have received numerous calls from members in the past week, worried about the shutdown and asking if we can help them financially," said Robin Lentz, president/CEO of Cabrillo CU, San Diego, Calif. "Many of them are still working. They need money for gas to get to work and they still have families to feed even though they're not getting paid."
So far, more than three dozen credit unions have stepped up to help, but those are only credit unions that have reported to News Now or whose efforts were part of local news coverage in their communities. Given credit unions' cooperative not-for-profit structure, many more credit unions assisting their members through the shutdown are likely.
Cabrillo CU is rolling out a 0% loan to help workers and their families. The line of credit is equal to an employee's last full paycheck, up to $2,500. Should the shutdown continue through Friday, when most of San Diego area federal employees are paid, the line of credit will appear on their account. If the shutdown lasts longer, Cabrillo CU is prepared to do it again to cover the second pay period on Oct. 25.
"It's part of a program we created in 2008 called PAL, short for Payroll Assurance Loan," said Toby Hayes, Cabrillo's vice president of marketing. Cabrillo activates it several times a year for certain federal employees when their payroll is not received for days at a time due to holidays or natural disasters. "It helps our members get by until they do get paid. Obviously, this shutdown could last a lot longer."
In addition to helping members, credit unions are leading efforts to offer advice through the media to the general public about the best way to manage finances during the furloughs.
An example: FAA CU, Oklahoma City, Okla. CEO Steve Rasmussen offered viewers of KFOR Channel 4 advice for uncertain times (kfor.com Oct. 4). The impasse could cause interest rates to go up on credit cards, auto loans and mortgages, which means higher monthly payments, said the station. Skip-a-payments, short-term loans and building emergency cash fund were discussed.
"The one thing you don't want to do is miss a credit card payment," Rasmussen advised. "Because if you do miss those, your interest rate could accelerate. Payments would go up."
In addition to credit unions previously reported with programs to provide furlough assistance during the shutdown, others include:
In Rapid City, S.D., Minuteman Community FCU President/CEO Mary Connick told the Credit Union Association of the Dakotas that it has received positive feedback about its assistance, not only from members but from other National Guard employees (The Memo Oct. 4). One National Guard member visited to personally thank the credit union for helping out. Another thanked the credit union for helping him and his family.
"We were ready to support our service members who are affected by the government shutdown," Connick said. "We have been serving the National Guard for over 50 years, and this is just another way to provide a service to our members who serve our country. This is a typical reaction of our credit union when adverse financial situations occur that may affect our military members," she added.
Cabrillo's Hayes sums it up: "As a credit union we were founded by federal employees. We successfully helped members through the 1995 shutdown, and we're here to help again. It's what we do best."