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StretchPay saved CU members 3 million plus in 07
DUBLIN, Ohio (2/29/08)--StretchPay, a credit union alternative to traditional payday lending, saved members of 31 credit unions more than $3 million in 2007. Credit unions in Ohio, Maryland, Michigan and the District of Columbia made 64,400 StretchPay salary advance loans last year, totaling nearly $25 million. They accumulated $476,000 in fees and $187,000 in interest at an annual percentage rate (APR) of 18%, according to the Ohio Credit Union League. Members borrowing the same amount at traditional payday lenders, which typically charge $15 per $100 borrowed and up to 391% APR, would have paid more than $3.7 million in interest and fees, said the league. StretchPay is a lower-cost alternative for consumers in need of small cash advances for short terms. A credit union charges an interest rate of 18% APR, along with an annual fee of $35, for a $250 Stretch Pay loan. The entire balance must be repaid by the borrower within 30 days before the member can take a new advance. Some credit unions also offer $500 StretchPay loans at 18% APR, with an annual fee of $70. “Our goal is to get our members on a path to economic prosperity,” said Bill Burke, CEO of Day Air CU and chairman of Credit Union Outreach Solutions Inc., which offers the StretchPay program. “We helped our members keep more than $3 million in fees and interest. The free financial counseling and education help them make wise, long-term financial decisions.” In addition to the loan, members who take part in StretchPay receive financial education and counseling from the credit unions to help them break free of the payday lending cycle. Credit unions also report loan payments to the credit bureaus, allowing Stretch Pay consumers to build upon their credit standing.
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