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Pa. payday alternative saves consumers big bucks
HARRISBURG, Pa. (3/13/09)--Pennsylvania's Credit Union Better Choice payday-loan-alternative program has saved borrowers nearly $5 million in interest and fees, according to the Pennsylvania Credit Union Association (PCUA). The payday lending alternative was developed in conjunction with the Pennsylvania Treasury Department. The state's consumers saved an average 80 cents in loan fees and costs for every dollar borrowed through the program rather than through a typical payday loan. That translates to more than $4.9 million. Also, borrowers placed $686,155 into savings accounts Since the program's inception in October 2006, roughly 79 credit unions with 211 locations have agreed to offer the loans, with additional participants continuing to sign on, said PCUA. Participating credit unions made nearly 15,000 loans totaling $6.8 million in volume since the program started. The average loan amount was $466.33. During the six months ending Dec. 31, 2008, about 72 credit unions reported 5,205 loans totaling more than $2,388,278. "As many Pennsylvanians feel squeezed in our rough economy, the ongoing usage of the Credit Union Better Choice program indicates that consumers need access to low-cost short-term loans," said Jim McCormack, PCUA president/CEO. "I'm pleased that they can turn to a credit union to fulfill that need in a fairly priced way." "Pennsylvania's families feel the effects of the recession and should have quick access to reasonable and fair loans," said Treasurer Rob McCord. "In this new era of responsibility, consumers should be able to use loan products that will help them make ends meet--and also pay dividends into the future. Better Choice does just that by pairing short-term loans with savings and financial education." A typical $500 payday loan costs consumers $15 for every $100 borrowed for two weeks, or about $450 over 90 days. A $500 Better Choice loan costs about $42.50 for the same 90 days, and at the end of the loan term, consumers also have $50 in a savings account. The program also provides financial education.
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