Credit Unions Attempt To Break Payday Loan Cycle
Credit unions have been reporting a disturbing trend lately: Thousands of credit union customers were turning to payday outlets for small loans to be repaid with their next paychecks. To counter this problem, the Filene Research Institute is working with credit unions in Ohio, Maryland and Wisconsin to design alternative loans and will expand into 10 more states next year. Usatoday.com reports:
It is also encouraging credit unions to offer check cashing, international wire transfer and other services now offered by high-cost firms, along with credit counseling. "Payday lenders stepped in and built a niche very nicely, but very expensively," says Lois Kitsch of the Filene Research Institute. "Credit unions have a very difficult time … because they have a very real problem lending to get people from paycheck to paycheck."
Read more: Breaking the cycle of payday loan ‘trap’