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SECU payday loan alternative passes 1 billion mark
RALEIGH, N.C. (3/4/08)--North Carolina-based State Employees' CU (SECU) has surpassed the $1 billion mark for cumulative advances on its Salary Advance Loan (SALO) program, a payday loan alternative. SALO's savings component has helped members, who had no previous savings, accumulate more than $13.2 million in savings. The program originated in January 2001 as a low-cost alternative to payday lenders charging exorbitant fees. So far SECU has nearly 100,000 members with the program, which saved them $145 million when compared with the cost of typical payday loans. Typical payday lenders charge an average of $15 per $100 borrowed, which cost consumers more than $150 million for $1 billion in loan advances. In contrast, $1 billion in advances on the SALO program cost credit union members $5.9 million. SECU's SALO program is a no fee, low interest 12% loan that allows members to borrow up to $500 per month and repay the loan with funds from their next paycheck. The savings feature automatically deducts 5% of the borrowed amount and places it in a savings account for the member to cover future expenses. According to Phil Greer, senior vice president of SECU's loan administration department, the program has "provided a viable alternative to members who were being taken advantage of by payday lenders. Not only has the credit union been able to save members millions of dollars in interest, we have given them a unique way to accumulate substantial savings and make a positive financial difference in their lives."
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