BISMARCK, N.D. (1/8/15)--As potential legislation to curb payday lending gains steam in South Dakota, the Credit Union Association of the Dakotas (CUAD) continues to promote credit unions as an alternative for affordable short-term loans.
Three decades ago, South Dakota repealed its interest rate caps to lure Citigroup's credit card operations to the state. The strategy worked. More than 17,000 South Dakota residents are currently employed in the financial services industry. But the looser lending laws also attracted payday lenders to South Dakota, which is one of only seven states without a rate cap (American Banker Jan. 2)
State Rep. Steve Hickey (R-Sioux Falls) is preparing a ballot initiative to cap interest on payday loans at 36%. It would go before voters in 2016, and both sides have said it would effectively end payday lending in South Dakota.
Robbie Thompson, CUAD president/CEO, has asked the league's South Dakota Government Affairs Committee to establish and implement a payday lending task force. Jeff Jorgenson, CEO of $87 million-asset Sioux Empire FCU, Sioux Falls, S.D., will chair this task force. The task force's objectives include:
"South Dakota credit unions have, and will, continue to promote themselves as an alternative to payday lending," Thompson told News Now. "Many of our members offer short-term, small-dollar loans with less fees, better rates and reasonable payment requirements to their members."