HARRISBURG, Pa. (3/2/12)--Borrowers in Pennsylvania have saved more than $18 million since 2006 by using Credit Union Better Choice loans instead of typical payday lending products.
According to the Pennsylvania Credit Union Association (PCUA), 79 participating credit unions statewide issued 53,714 loans totaling almost $26 million dollars since the program was launched.
The Credit Union Better Choice program provides a payday lending alternative by allowing participating credit unions to loan up to $500 to borrowers for 90 days, PCUA said in a release.
In 2011, participating credit unions made 10,829 loans totaling $5.23 million. During the final six months of 2011, credit unions made 5,098 loans totaling $2.3 million, while borrowers deposited more than $230,000 in savings accounts linked to the program.
A $500 Better Choice loan costs $42.50 for a 90-day period and encourages savings by requiring consumers to deposit $50 in a savings account by the end of the loan period. Borrowers also receive financial education to help them make better financial decisions.
In comparison, a typical $500 payday loan costs $15 for every $100 borrowed for two weeks, which adds up to $450 over 90 days. That means consumers save an average of 80 cents in loan fees and costs for every dollar borrowed through a Better Choice loan instead of a payday lender, said PCUA.
Better Choice loans were developed by the PCUA, the Pennsylvania Treasury Department and the Pennsylvania Department of Banking.