Pittsburgh Credit Unions and Pennsylvania Treasury Department Offer Payday Loan Alternative
by Steve Cypher on Monday, April 6th, 2009A coalition of Pittsburgh-area credit unions and the Pennsylvania Department of Treasury have teamed up to offer consumers an alternative to payday lenders.
Helping consumers save $5 million
It has come to our attention at Auto Credit Express that a special program called “Better Choice Loans” has been available to credit union members in the Pittsburgh area. Not only that, but as evidenced by a recent press release from the Pennsylvania Treasury Department, the department may be looking at extending the program to other parts of the state.
Here is the press release:
Treasurer McCord Holds Roundtable Discussion on Payday Lending Alternative With Pittsburgh Residents
PITTSBURGH – In the midst of a recession that is taking a toll on working class families across the Commonwealth, Treasurer Rob McCord today held a roundtable discussion with Pittsburgh area residents to learn how the Better Choice payday lending alternative has helped them make ends meet. Treasurer McCord met with members of the Pittsburgh Federal Credit Union in Mount Oliver who have used Better Choice loans to avoid the exorbitant interest rates and fees of traditional “payday” lenders.
“Access to fairly priced short-term loans that empower, rather than exploit, is a must-have for Pennsylvania residents, especially during this recession,” Treasurer McCord said. “Better Choice loans save Pittsburgh Federal Credit Union members an average of 80 cents in fees and costs for every dollar borrowed - savings they would not find at a typical payday lending shop.”
The Better Choice program was established through a public-private collaboration between the Pennsylvania Treasury Department and the Pennsylvania Credit Union Association (PCUA). Better Choice loans are currently available at 79 credit unions with 211 locations, and additional participants continue to sign on. Since the program’s inception, the participating credit unions have made nearly 15,000 loans totaling $6.8 million in volume.
Treasurer McCord and the Better Choice participants were joined at today’s roundtable discussion by Cookie Yoder, President and CEO of the Pittsburgh Federal Credit Union.
“As more payday lenders opened up in the city, we had been seeking a product to counter these high cost loans,” said Yoder. “When the Better Choice program was being piloted, we quickly signed on. It’s been a win-win for our members and the credit union.”
“Pittsburgh Federal Credit Union embodies the central mission of the Better Choice program - to provide a much-needed financial tool along with the financial literacy skills to use it wisely,” Treasurer McCord said. “I applaud Cookie Yoder and the entire Pittsburgh FCU team for their tremendous work in getting this important product out to the community.”
Payday lending, sometimes called cash advance, is the practice of using a post-dated check or electronic checking account information as collateral for a short-term loan. According to the Center for Responsible Lending, these predatory practices cost Pennsylvanians at least $100 million every year. Studies have shown that payday lending is especially widespread in predominately lower-income and minority areas where consumers may have more difficulty gaining access to less costly credit options.
A typical $500 payday loan costs consumers $15 for every $100 borrowed for two weeks, or approximately $450 over 90 days. A $500 Better Choice loan costs consumers approximately $42.50 for the same 90 days and at the end of the loan term, the consumer has $50 (ten percent of the loan) in a savings account, which encourages them to develop a savings habit. In addition, the program builds upon this new savings component by providing financial education to consumers to help them make better informed financial decisions. Pennsylvania consumers save an average of 80 cents in loan fees and costs for every dollar borrowed through a Better Choice loan rather than through a typical loan from a payday lender.
To learn more about the Better Choice program and a list of participants, visit www.PaCreditUnions.com.
Pennsylvania Treasurer Rob McCord is committed to managing the Commonwealth’s assets for the benefit of all Pennsylvanians. A respected business leader, McCord is focused on strengthening the state’s economy, enhancing the financial security of Pennsylvanians, and increasing the efficiency and transparency of the Treasury. To learn more about Treasurer McCord’s initiatives and programs, please visit the Pennsylvania Treasury Department at www.patreasury.org.
EDITOR’S NOTE: Payday lending is an issue that plagues communities all across Pennsylvania, regardless of geography. To speak with Treasurer McCord, or to speak with a representative from your local Credit Union, please call 717-787-2991. Below, please find a list of Better Choice participants.
A-K Valley Federal Credit Union
ALCOSE Credit Union
Allegheny Central Employees Federal Credit Union
Ambridge Area Federal Credit Union
American Heritage Federal Credit Union
AmeriChoice Federal Credit Union
Belco Community Credit Union
Berks Community Federal Credit Union
Bethlehem Teachers Federal Credit Union
BVA Federal Credit Union
Cal-Ed Federal Credit Union
Carnegie Mellon University Federal Credit Union
Central Valley Federal Credit Union
Chester Upland School Employees Federal Credit Union
Choice One Community Federal Credit Union
Clearview Federal Credit Union
Cross Valley Federal Credit Union
CTCE Federal Credit Union
Eagle One Federal Credit Union
EC & EE Employees Federal Credit Union
Erie Federal Credit Union
Erie General Electric Federal Credit Union
Fairless Credit Union
First Area Federal Credit Union
Fisher Scientific Emp. Federal Credit Union
Franklin-Oil Region Credit Union
Freedom Credit Union
G. A. P. Federal Credit Union
Galaxy Federal Credit Union
Glatco Credit Union
GNC Community Federal Credit Union
Greater Pittsburgh Police Federal Credit Union
HealthCare First Credit Union
Hershey Federal Credit Union
Highway Federal Credit Union
I. C. Federal Credit Union
Incol Credit Union
Keystone Federal Credit Union
Keystone United Methodist Federal Credit Union
LANCO Federal Credit Union
Latrobe Federal Credit Union
Little Giant Federal Credit Union
M-C Federal Credit Union
Mennonite Financial Federal Credit Union
Mountain Laurel Federal Credit Union
Neighbors 1st Federal Credit Union (Frick Federal Credit Union)
NET Federal Credit Union
Newcomer Employees Federal Credit Union
North East Welch Federal Credit Union
P. S. T. C. Employees Federal Credit Union
Pannonia Federal Credit Union
Penn Drake Federal Credit Union
PENNSTAR Federal Credit Union
People First Federal Credit Union
People For People Community Development Credit Union
Pittsburgh Central Federal Credit Union
Pittsburgh Federal Credit Union
PPG & Associates Federal Credit Union
Riverfront Federal Credit Union
Riverset Credit Union
Schuylkill Federal Credit Union
SERVCO Federal Credit Union
Service 1st Federal Credit Union
Sun East Federal Credit Union
Superior Credit Union
Timberland Federal Credit Union
Transit Workers Federal Credit Union
Tri-Valley Service Federal Credit Union
Trouvaille Federal Credit Union
TruMark Financial Credit Union
UGI Employees Federal Credit Union
USX Federal Credit Union
VA Pittsburgh Employees Federal Credit Union
Washington Area Teachers Federal Credit Union
WEST-AIRCOMM Federal Credit Union
Westmoreland Community Federal Credit Union
Wheatland Federal Credit Union
Your Choice Federal Credit Union
Zion Federal Credit Union
Source: Pennsylvania Treasury Department
The Bottom Line
Here at Auto Credit Express, we applaud the efforts of the Pennsylvania Treasury Department as well as those local credit unions involved in the program.
I really don’t understand what the problem is. I’m just a normal guy that don’t have any clout, but it’s us that are taking these loans out. I borrowed $300 from cashloancity.com last month to pay for things the kids had to have that week. I paid it back and everyone was happy. Is this nothing more than a political exposure subject? Go after credit card companies if you are serious about high interest and charges. They Charged me $40 for being one day late, and charged me another $40 because the first $40 put me over my limit. Oh but that’s completely alright because of the power they have over Washington right?
Thank you,
Ray
Pittsburgh…
A coalition of Pittsburgh-area credit unions and the Pennsylvania Department of Treasury have teamed [...]…