MADISON, Wis. (3/6/13)--More credit unions are advising their members on how to mitigate the impact of sequestration on their financial well-being and offering special services to reduce the impact from the gap in income generated by government furloughs.
More than one million employees of the federal government, many of them members of credit unions, may receive furlough notices due to the budget cuts, which took effect Friday.
San Diego, Calif.-based Cabrillo CU said Friday it is rolling out a 0% annual percentage rate (APR) Sequestration Assistance Loan (SAL) for $2,500 to help supplement incomes of federal employees facing temporary furloughs or reduced hours as a result of the mandatory budget cuts.
"We've received numerous calls from members in the past week, worried about how the sequestration will affect them and their paychecks," said Robin Lentz, president/CEO of the $196 million asset credit union. "They've asked us if we could help, so we've developed this loan program in response to their needs," Lentz added.
According to Toby Hayes, Cabrillo's vice president of marketing, the credit union has members in "dozens of federal agencies. All of them have different payroll days and each federal agency is handling the temporary budget cuts differently, based on their operational needs. So our biggest challenge was developing a single way to help as many federal employees as possible, to provide some relief caused by the temporary reduction in their payroll."
The National Foundation for Credit Counseling (NFCC) is offering consumers advice--which credit unions can pass along to members--about maintaining financial stability during sequestration. Consumers should assess their current financial situation and evaluate four personal finance areas: budgeting and credit management, saving and investing, planning for retirement, and home equity. Credit unions have a variety of financial planning tools available from the Credit Union National Association. (Use the links.)
If the assessment finds problems, don't ignore them--especially in emergencies, NFCC said. "Take action sooner rather than later, as delaying only makes the problem harder to resolve," said NFCC. Consumers can take control by reviewing their credit report and score, creating a cash-flow calendar listing all sources of income and dates bills are due, paying down debt and suspending uses of charge cards; and getting financial counseling.
Other credit unions announcing plans to assist members through the furloughs have similar plans:
Another News Now story on sequestration, "CUs To Furloughees: 'Be Assured, We've Got Your Back,'" was a featured link in a Washington Post story. See related story, "Wash. Post Spotlights News Now On Furloughs." This is a second article in that series.
Furloughs aren't the only time credit unions rally for members. Credit Union Magazine's story, "CUs Lend Members a Hand," addresses how "the worst of economic times tends to bring out the best in credit unions. The not-for-profit, cooperative business model was born in times of economic hardship. It still shines bright during dark days." To access the article use the link.