Countering payday lenders
Loan products meet community needs and allow Afena FCU to thrive, says CEO Karen Madry.
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Listening to the community helps Karen Madry stay in tune with the 8,000 members of Afena Federal Credit Union.
“Our community is at the core of everything we do, particularly the work we are doing to provide alternative lending solutions for underbanked and low-income individuals,” says Madry, president/CEO of the $84 million asset credit union in Marion, Ind. “Like many high-poverty communities, we have a proliferation of high-interest loan stores and payday lenders that prey on financial vulnerability. It’s our job to educate as many people as possible that there’s a better way.”
Madry’s commitment to providing low-interest, small-dollar loans as an alternative to payday lending led to the creation of “Bridge the Gap” loans, a unique partnership between the credit union and the Community Foundation of Grant County.
The loans provide members with emergency funds between $200 and $2,000 and are available exclusively to people earning below 80% of the median family income. Repayment terms vary by loan amount but favor small payments—typically less than $50 per month—to reduce stress on family budgets created by predatory payday lending.
Madry developed an additional program to help members who have already fallen into the clutches of high-interest loan stores.
“We have members with loans at finance companies who are paying upwards of 50% to 60% APR, sometimes more,” she says.
Refinancing high-interest debt saves members thousands of dollars in interest. Madry shares how one member lowered his monthly payments by $1,200 when he refinanced his loans through the credit union.
Designing loan products that meet the community’s needs has helped Afena Federal Credit Union thrive, but growth can be challenging.
“My biggest difficulty is figuring out how to beef up my staff in a society where people are looking more and more to work remotely and still ensure members have great service when they are in the branch,” Madry says. “Older members are more brick-and-mortar while younger members are all about technology. We are constantly trying to thread that needle.”
The credit union’s shares and loans increased more than 12% year-to-year at the end of October, while assets grew more than 15%. Introducing remote deposit capture, instant-issue debit cards, and a rewards credit card program in 2022 will allow Afena Federal Credit Union to continue to grow.
Madry, who joined the credit union as CEO in May 2014, thrives on a busy schedule, relying on her faith and daily prayer to “refill the well.”
Serving on CUNA’s Small Credit Union Committee provides networking and inspiration, including “permission to think outside the box.”
“I think the reason so many small credit unions are disappearing is that they’re stuck in the way they’ve always done it,” Madry says. “We have to be continually willing to reinvent ourselves.”