ALTERNATIVE TO PAYDAY LENDERS OFFERED

HARRISBURG, OCT. 25 – It can happen to almost anyone – an unexpected expense or unplanned bill is due a week before a paycheck is expected. According to state Sen. Connie Williams, many people will turn to payday lenders for a small loan to tide them over, but now consumers have a Better Choice.

"This new program is being offered through Pennsylvania Credit Unions and the Pennsylvania Department of Treasury to provide consumers a better financial alternative to payday lenders," Williams said. "Not only will the program provide small loans at lower percentage rates than most payday lenders, but there is an educational component to help people learn how to make better financial decisions in the future."

Pennsylvania is the first state in the United States to offer a statewide program as an alternative to payday lenders. Better Choice was developed by the Pennsylvania Credit Union Association (PCUA) in partnership with Pennsylvania Treasurer Robert P. Casey Jr., and with support from the Pennsylvania Department of Banking.

Through the program, consumers may obtain affordable, 90-day loans of up to $500. Loans have low fees and do not require collateral or a credit check. While payday lenders commonly charge as much as $25 per $100 borrowed, the Better Choice loan application fee will not exceed $25, regardless of loan size. Interest rates will not exceed 18 percent (as compared to payday lending debt traps that can lead to effective interest rates in excess of 500 percent). Loans carry a 90-day repayment term. Loan payments can be made in installments on a weekly, bi-weekly or monthly basis.

The program is designed to promote wealth building and financial education. When the loan is given, an amount equal to 10 percent will be deposited into a savings account in the borrower's name. During the loan, interest accrues on the savings account and any interest paid on the additional 10 percent is rebated upon payoff. Credit unions will also offer financial education/coaching in conjunction with the Better Choice program.

Currently 129 branches of 37 credit unions have announced they would participate in the Better Choice program and more are expected to join in the coming weeks.

"Finally, people facing tough decisions on how to make it to the next paycheck will have a real alternative to payday lenders," Williams said.

For a list of participating credit unions visit www.PaCreditUnions.com.