HARRISBURG, Pa. (2/13/13)--Since launching in 2006, nearly 65,000 Credit Union Better Choice loans have been issued to Pennsylvania credit union members for short-term cash needs, saving borrowers more than $23 million over using a traditional payday lending product, said the Pennsylvania Credit Union Association.
The continued growth in the program, the credit union alternative to payday loans, indicates that consumers still are in need of small-dollar loans, PCUA said.
The 72 participating credit unions statewide have issued 64,930 loans totaling more than $32 million since the program's inception.
In the Credit Union Better Choice loan, in which credit unions offer borrowers a 90-day loan with a $500 limit. The loans have been used for Christmas gifts, taxes, car repairs, heating fuel and funeral expenses. The program was developed through a collaboration of PCUA, the Pennsylvania Treasury Department, and the Pennsylvania Department of Banking and Securities.
Roughly 206 locations offer the loans statewide. From July 1 to Dec. 31, 2012, about 6,044 loans totaling $3.9 million were issued. Borrowers also placed more than $385,000 into savings accounts during the period.
A typical $500 payday loan costs consumers $15 for every $100 borrowed for two weeks, or roughly $450 over 90 days. A $500 Credit Union Better Choice loan costs $42.50 for the same 90 days and at the end of the loan term, consumers have $50 in a savings account to save. Also, the program provides financial education to consumers to help them make better informed financial decisions.
Pennsylvania consumers saved an average of 80 cents in loan fees and costs for every dollar borrowed.