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Ohio payday referendum story notes CU as alternative
CLEVELAND, Ohio (11/6/08)--A pre-election story in the Cleveland Plain Dealer notes credit unions as an alternative to payday loans, just before Ohio voters were to decide the fate of a payday loan referendum. The newspaper cited Faith Community United CU’s (FCUCU) payday loan alternative--which offers one-month loan of $500 at an annual percentage rate of 17% (The Plain Dealer Nov. 2). The story focused on Ohio’s payday referendum--Issue 5, or House Bill 545--which was voted on in Tuesday’s election. At press time, the referendum was ahead with 67% of the vote counted. If passed, annual interest rates on payday loans would be capped at 28%, payday loans would be limited to $500, lenders would be required to give consumers at least 30 days to repay the loans, borrowers would only be allowed to take out four payday loans a year, and a state database would be created so lenders wouldn’t unknowingly grant more payday loans beyond a consumer’s limit. If the referendum does not pass, payday lenders can continue charging 391%. Issue 5 was backed by the Center for Responsible Lending of Durham, N.C. The Ohio Credit Union League didn’t advocate a position on the bill because it doesn’t affect credit unions directly. Rita Haynes, FCUCU president, who will receive the 2009 Herb Wegner Award for Individual Achievement during the Credit Union National Association’s Governmental Affairs Conference in February, wrote a letter in response to the article. “This subject is very dear to me because we have seen so many lives destroyed by these culprits who only want to make outrageous profits on the back of the poor undereducated in financial matters,” Haynes wrote. She also noted the credit unions’ “Greater Grace” program that pays off four to five payday loans directly if the borrower works, agrees to payroll deduction and signs an agreement never to go back to a payday lender.
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