CUNA proposes PAL improvements and small dollar lending opps

July 30, 2018


CONTACT: Lauren Williams – CUNA Communications; (202) 626-7642; 

Washington, D.C. (July 30, 2018) – The National Credit Union Administration is giving credit unions the opportunity to comment on the proposed Payday Alternative Loans (PAL) II rule. Credit Union National Association (CUNA) supports expanding opportunities for credit unions to provide small-dollar, short-term loans, and are in fact ideally situated to satisfy this consumer demand.  

“CUNA would prefer a holistic approach to PAL products that would provide credit unions and consumers with flexibility to tailor short-term, small-dollar loans to their needs, without being overly prescriptive,” the trade group wrote in the comment letter filed on Monday. “CUNA retains concern over the overall low (9%) representation of credit unions using the existing PAL program, cognizant that the compliance and entry costs often outweigh the potential benefits to consumers. We believe a parameters-based approach would offer greater flexibility for credit unions to engage this market.” 

Additional considerations from CUNA include:  

  • That the proposed 28% annual percentage rate (APR) cap on PALs in the rule is “overly conservative,” noting that recent Bureau of Consumer Financial Protection and Department of Defense short-term, small-dollar loan rules cap APR at 36%; 
  • For the purposes of credit unions’ customer service, we believe that one open PAL loan at any given time should be sufficient. 
  • We do not believe that low-income designated or CDFI credit unions should be subject to the 20% net worth limit; such exception would echo the MBL rule application and we believe would be appropriately applied here as well; 
  • Concerns about the maximum loan value remaining stagnant over time. If the final rule were to retain the $2,000 limit, CUNA would like a mechanism to revisit the terms and definitions of what constitutes small-dollar; 
  • A $50 application fee limit would ensure sufficient range for institutions to develop pricing options that would permit new market entrants by supporting the actual costs involved; and 
  • Allowing individual credit unions to determine ability to repay requirements, because they would be better positioned for access to a member applicant’s employment, direct deposits, revolving loans, assets, and/or overall credit, and should have discretion to make their own ability to repay determinations.  

CUNA remains supportive of a repurposed rule that would overhaul the existing and proposed PAL I and PAL II product lines into a singular PAL program that provides flexible ranges so that lending products can be tailored to regional, market and consumer needs.  


About CUNA 

Credit Union National Association (CUNA) is the only national association that advocates on behalf of all of America’s credit unions, which are owned by 110 million consumer members. CUNA, along with its network of affiliated state credit union leagues, delivers unwavering advocacy, continuous professional growth and operational confidence to protect the best interests of all credit unions. For more information about CUNA, visit