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This is a much more complicated matter than most give it credit. Although Mary and I differ on some of the numbers, the end result is the same. Lack of awareness pushes many well intended customers (both CU Members and non) to pull into the parking lot of a Payday Loan Store rather than a Credit Union. While I have reams and reams of data on this subject, for me-- it all boils down to the basics. If we start with the fact that only 1 in 8 Americans balance their checkbook, (CNN/Money web site, 10/28/04), that’s not all that encouraging, for our country or our credit unions. I urge all the readers of this column to not try and access blame, but rather look outside your window at the cars in the parking lot. Count eight cars and the last one is the least likely to be a payday loan customer, and if they are a member they are generally golden. It’s that other multiple of seven that you must consider, as that lot contains a mixture of members, non-members, employees, building staff members. Ask yourself, How can I positively affect at least two more cars (people)? Think about your field of membership (composition, percentage rate of payroll direct deposit , credit utilization statistics). Chances are, if your credit union is like many others at least 30% of your members are using a Payday Loan Provider, and that includes your employees. There are successful ways to work through this problem, and I know about them firsthand. But I have found more often than not, most of the time you needn’t go past the parking lot to see how big the opportunity to positively affect someone''s life is. Oh, and one more thing...before you write off the above statement as ‘Maybe in someone else’s Credit Union’, remember the analogy: “almost twice the number of McDonald’s locations”.
Thanks for shedding light on this important issue. This is an excellent opportunity for credit unions to differentiate themselves from banks (although it''s still an uphill battle considering how many CUs are using similarly predatory programs, such as ODP). Hopefully this will get some attention with CU CEOs and we can all remember that we are here for the good of the member.
Mary, great information about the providers and users of payday loans! So I have to ask, why aren’t credit unions attacking this predatory lending practice as part of a national initiative? By attacking, I mean calling out how the consumer is getting screwed over by payday lenders and providing them with a more affordable alternative that promotes increased financial wellness. Taking on such a collaborative effort fits within the tenets of the movement, would help many consumers and would start branding “credit union” for what it really can be. Please refrain from providing lame excuses about how it is impossible to rally and coordinate such a broad audience. It is achievable! Just my two cents from this vendor who believes and supports the tenets of the credit union movement.
Chuck Van Court
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