S. Carolina CUs tout payday loan alternative products

COLUMBIA, S.C. (2/20/07)--South Carolina credit unions' efforts to counter payday lenders are gaining the media's attention.

A recent article by columnist Warren Bolton advised consumers who need cash and cannot call on friends for help to seek the aid of a credit union instead of paying payday lenders' typical annualized interest rate of 391% (The State Feb. 16).

Bolton based his advice on a recent survey by the South Carolina Credit Union League. The survey shows that the 21 participating credit unions offer small loans averaging $250 at an interest rate that ranges from 9% to 18%, with an average rate of 16.26%.

Several credit unions that offer small loans to help members avoid payday lenders were featured:

  • Carolina Trust FCU, Myrtle Beach, offers members up to six months to repay micro-loans that have a maximum amount of $500. To gain approval, borrowers must be employed for six months and have direct deposit. No credit check is performed.

  • Family Trust FCU, Rock Hill, will soon offer a payday alternative designed to encourage savings by placing 10% of the loan amount in a savings account. Savings withdrawals are not allowed until the loan is repaid.

  • Founders FCU, Lancaster, combines small, flexible loans with free access to three full-time counselors who give financial advice to members.

  • Brookland FCU, West Columbia, helps members escape the payday lending cycle with a 12-month loan of up to $1,500. The faith-based credit union offers the loans as part of its Getting Real About Christian Economics (GRACE) program.

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