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Wisconsin league monitoring anti-payday loan bill
PEWAUKEE, Wis. (6/1/09)--The Wisconsin Credit Union League is monitoring an anti-payday lending bill announced Thursday in the state that would cap rates on payday loans. Under the bill, payday lenders could not charge more than 36% in annual interest on loans. Wisconsin in the only state that doesn’t cap the rates for licensed lenders, said state Rep. Gordon Hintz (D-Oshkosh), the bill’s author. The average interest rate for a payday loan in Wisconsin is 525% (Associated Press May 29). The league said it is reviewing the bill’s language and hasn’t decided yet whether it will support the measure. While lenders in the state argue the measure would shut down some of their lending centers, credit unions can help consumers with payday loan alternatives that cost less than half of what traditional payday lenders charge, said the league. Credit unions also encourage members to save money, receive financial counseling and make better choices to transition into more traditional loan products with lower rates, said Brett Thompson, Wisconsin league president/CEO. “Because not-for-profit credit unions exist to serve members, not drive profits, a credit union offers loan terms in members’ best interests,” Thompson said. “Lawmakers want to protect consumers because for-profit, non-traditional lenders don’t operate that way.” “While the Federal Reserve considers the minimum profitable loan to be $2,400, almost 90% of Wisconsin credit unions would grant a $500 loan to help a member and more than 75% of them would make a loan of just $100--all without the excessive costs that typify storefront lenders,” the league said. Credit unions also offer help to consumers through REAL Solutions, which helps families improve their financial position by encouraging saving and investing, the league said. Wisconsin had 530 licensed payday lenders in 2008, according to the AP.
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