MADISON, Wis. (11/18/14)--Earlier-than-expected cold temperatures and wildly fluctuating fuel costs can make it challenging for consumers to budget for their winter utility bills. Some credit unions, particularly those in the Northeast, offer special loans to their members to cover energy costs.
A survey by the Maine Credit Union League found nearly 75% of the state's credit unions are offering special low- or no-interest energy loans this winter.
"It's great to see Maine credit unions again putting the philosophy of 'people helping people' to work for Maine consumers," said league President John Murphy. "The ability to help them cover their heating costs with special loans at low interest rates or, in some cases, a rate of 0% will make a big difference on many people's budgets."
As of early November, more than $5 million had been committed or set aside by Maine credit unions to fund these special loans, which had an average interest rate of 3.99%.
Fuel loans typically are paid directly to the provider, whether it's for wood, gas, oil or electric, or reimbursement for members' utility bills. Casco FCU, Gorham, Maine, with $47 million in assets, offers loans for members to buy heating fuel, firewood or wood pellets in bulk while prices are low or to install a wood, gas or pellet stove.
Because the fuel companies typically don't take credit cards, consumers must be ready with check or cash in hand when deliveries are made, said Cathy Harrington, chief lending officer, Quincy (Mass.) CU, with $456 million in assets.
The line of credit provides peace of mind to members. "They're not in a panic when their fuel is running low and they have to fill their tank," Harrington told News Now.
See-sawing fuel costs can decimate budgets, which increases the importance of credit availability. Quincy CU offers a $2,000 line of credit with a 5% interest rate that is open only between Oct. 15 and April 15. During the other six months, members pay it back through automatic payments.
"People were calling at the first of the month," Harrington said about the program. "People use it every winter, and it's good because the payback is automatic."