WASHINGTON (10/28/14)--Credit union programs that help members avoid the quicksand of predatory payday lenders were under the spotlight in The New York Times Monday thanks to a letter to the editor by Credit Union National Association President/CEO Jim Nussle.
Nussle, noting a recent Times editorial that raised questions about how to protect the best interest of consumers who need help restoring credit, told the Times' extensive readership that credit union programs build experience in saving, not just borrowing.
"Unlike predatory payday lenders, credit unions have programs that actually help members out of a hole instead of keeping them trapped in one," Nussle wrote.
To illustrate the credit union difference, Nussle cited two programs used by credit unions: One directs loan payments into savings accounts once a loan is repaid; another links credit unions with employers, and repayments are made by payroll deduction, and again, once the loan is repaid, payments continue as deposits to the member's savings account.
"These and other lending programs for members with troubled credit have interest rates significantly below what predatory lenders charge," Nussle underscored.
He added, "It's unfortunate that quick, short-term access to money is needed today by some people, but they shouldn't be ripped off in the process. Credit unions demonstrate that access to this credit doesn't have to be predatory."
Nussle took the leadership position at CUNA on Sept. 20. He is a former member of the U.S. Congress, serving from 1991 to 2007, and was director of the Office of Management and Budget from 2007 to 2009.