knowledge center payday loans

Payday Loan Payday Loan ConsiderationsConsiderations

for Credit Unionsfor Credit Unions

Lois I. KitschLois I. Kitsch

National Program ManagerNational Program Manager

REAL SolutionsREAL Solutions™™

Strategy for Financial Success

LOW WEALTH FAMILIESLOW WEALTH FAMILIES

EDUCATION CREDITTRANSACTION

SERVICESSAVINGS

PRODUCT AWARENESS

COUNSELINGSTAFF TRAINING

PAYDAY ALTERNATIVESMALL LOANS

USED CAR LOANS LOAN POLICIES

STAFF AWARENESS

LOW MEMBERSHIP FEE SAVINGS AWARENESS

SAFE ACCOUNTSLONG TERM SAVINGS

CHECK CASHINGFEE FREE CHECKING

MONEY ORDERSREMITTANCES

TAX PREPARATION

CREDIT UNIONCREDIT UNION

HOME OWNERSHIP

HLPR LOANCOUNSELING

STAFF TRAININGCREDIT SCORE

Who are these REAL People?

75% with income under $50 thousand

Women – 62% with children at homeWomen – 62% with children at home

Young – average age under 42Young – average age under 42

Educated – most have some collegeEducated – most have some college

Employed – 100%Employed – 100%

Banked – 100%Banked – 100%

Our members – estimated 20%Our members – estimated 20%

R.E.A.L. People Use AFS Service Providers

Check Cashers

Pawnbrokers

Call Centers

Online Payday Lenders

Banks (very limited)

Credit Unions (more than banks)

A Credit Union Opportunity... Really?

Do Our Members Use Payday Lenders

YES!!!YES!!!100% of Wisconsin Credit Unions

100% of Ohio Credit Unions100% of Kansas Credit Unions91% of Maryland Credit Unions

Of the 60 REAL Solutions Credit Unions Surveyed

Do Our Employees Use Payday Lenders

YES!!!YES!!!50% of Wisconsin Credit Unions

67% of Ohio Credit Unions75% of Maryland Credit Unions

Of the 48 REAL Solutions Credit Unions Surveyed

Things to Think about…

Target Market

Members/Nonmembers

Product components

Education

Savings component

Terms/conditions

Delivery systems

Marketing

Selling the product

Volunteers

Staff

Members

Potential members

Community

Telling the Story

Tracking Results

Members using

Dollars saved

Program stats

Telling the story

Media

Law makers

Community

Success Stories

PG County Credit UnionPot of Gold SavingsPot of Gold Savings

Member savings for a specific purpose3 or 5 years to accumulate $2,500; $5,000 or $10,000Current balance is 4.4% ($4 million) of credit union assets1,000 members (of 12,000 members ) are using the programThe member can borrow from the fund for 3% over the savings current rate

Sample Success

Ohio credit unions Stretch PayStretch Pay42 Participating Credit Unions

2007 Results8,900 Members 62,000 Advances$2,480,000 loans disbursed

3 Million Dollars Member Savings

GoodMoney ScorecardGoodMoney Scorecard

• Active GoodMoney members: 630

Closed GoodMoney members: 535

Total GoodMoney members: 1,165

Total number of loans: 8,272

Total dollar value of loans: $3,018,800

Average loan amount: $364.94

• Estimated savings over traditional payday lenders: $455,839

Referrals to FISC in 2005: 192

Referrals to FISC in 2006: 681

Referrals to FISC in 2007: 612

Total referrals to FISC: 1,485

Members currently in credit counseling: 27

Source: Prospera Credit Union

Pennsylvania Credit Unions

Started in October 2006

50 Credit Unions making loans 12-0765 credit unions currently

5,884 loans disbursed

$2,831,253 total disbursed

At least 350 users new members

Estimated Savings to Members - $2 MillionEstimated Savings to Members - $2 Million

Freedom Suite of Products

St Louis Community Credit Union2nd change checking, Money Max Card and pdl alternative

(product numbers for first six months of implementation)774 members using product1,114 advances done275,000 current portfolioAverage loan size $336Loans disbursed $374,424Default rate 1.2%27% interest with $25 annual fee10% required savings90 day termsRollovers allowed – no additional fee

Estimated Savings to MembersEstimated Savings to Members+$500,000+$500,000

To Learn More

Visit the NCUF Knowledge Center

Contact your League Liaison or your Field Coach

Contact NCUF – Jeff Purvis/Lois Kitsch

800 356 9655