1 / 9

Payday Lending and Credit Unions

Payday Lending and Credit Unions. Lois I Kitsch National Program Director National Credit Union Foundation. Payday Loan Questions. What is a payday loan? Very short term loans to consumers (mostly working families) using a check as collateral at very high rates of interest

yoshiko-emiko
Download Presentation

Payday Lending and Credit Unions

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Payday Lending and Credit Unions Lois I Kitsch National Program Director National Credit Union Foundation

  2. Payday Loan Questions • What is a payday loan? • Very short term loans to consumers (mostly working families) using a check as collateral at very high rates of interest • Why are these loans so controversial? • 90% of revenues are based on fees from trapped borrowers • A typical payday customer pays $793 in fees on a $325 loan • Consumer Federation of America

  3. Size of Market Payday Loan Questions? • How big is the payday loan industry? • 22,000 payday lending stores • Combined loans of $28 Billion • Total fees paid $4 Billion • Average loan size$325

  4. A Credit Union Opportunity... Really?

  5. Payday Loan Questions • Why are payday loan alternatives a member value proposition? • An estimated 7 to 15% of credit union members use payday loan products • It is known that even credit union employees are using the product • Our members are getting caught in the payday lending trap – making it difficult to honor other obligations

  6. Payday Loan Questions • What motivates credit unions to get involved? • Good business decision – • New members, new and often times profitable loans • Good social decision – • Our members are using payday loans – we need to help them and other consumers out of the payday loan trap • Good advocacy decision –

  7. Adding a Payday Lending Product Why does our credit union want to offer this product? • Revenue • To bring in new members • To help our existing members • To help my community • To help the credit union movement

  8. Adding A Payday Lending Product What other issues should we think about? • Selling the product to your volunteers • Selling the product to your staff • Selling the product to your members • Selling the product to your community

  9. The Credit Union Opportunity How to make the Credit Union Difference - • Add appropriate products to your menu of services • Determine if your members are caught in the short term loan cycle – Members do want a low cost short term loan option - offer a product to help them move up a wealth path • Price your product as low as possible to generate revenue • Encourage your members to save and to become savvy borrowers • Visit the FRI website for relevant publications

More Related