San Francisco CUs to market a better 'payday' loan
SAN FRANCISCO (1/25/10)--A payday alternative loan program offered by 13 credit unions in San Francisco was featured in an article written by San Francisco Mayor Gavin Newsom in Huffington Post Friday.
Newsom describes his meeting with 13 credit unions to form a new Payday Plus SF program, an alternative small-dollar loan to counter payday lenders, with a maximum interest rate of 18% annual percentage rate.
Payday Plus SF is the latest of a series of financial empowerment and financial literacy programs spearheaded by San Francisco Treasurer Jose Cisneros and builds on the Bank on San Francisco initiative that Newsom and Cisneros launched three years ago, the mayor wrote.
The credit unions in the program formed last month are already seeing results, he said.
Newsom told of Mark, whose mother's unexpected death sent him to a payday lender so he could afford to travel to her funeral. When the loan came due, it spiraled into another payday loan and another.
"Mark is now one of our success stories--he took out a Payday Plus SF loan, paid off his debts and is now rebuilding his credit as he makes reasonable monthly payments at his local credit union," Newsom said.
The credit unions call the loan "The better small dollar loan," according to an op-ed item in latimes.com (Dec. 21).
"San Francisco and the credit unions are taking an important step to solve the problem [of proliferating payday lenders]," wrote Anne Stuhldreher, senior research fellow at the New America Foundation, in the Times. "The new loans will set up cash-strapped consumers to succeed, not fail."
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