knowledge center payday loans
Post on 31-Oct-2014
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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
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