A Unique Partnership Battles Predatory Loans
JPMorgan Chase & Co has joined forces with the National Federation of Community Development Credit Unions to encourage programs that can be alternatives to high-cost payday loans. Payday loans are short-term loans being offered over the Internet as well as by some check-cashing firms that act as an advance against a paycheck. However, fees for many of those loans are high and terms for repayment very short with stiff penalties for nonpayment.
JPMorgan Chase is awarding a series of grants to local credit unions that have programs designed to give consumers better choices. For example, ASI Federal Credit Union, Harahan, LA received a $25,000 grant to introduce consolidation loans to help members pay off debts of up to $1,000 owed to predatory lenders. Borrowers will have 18 months to pay back those low-interest loans. Bethex Federal Credit Union in Bronx, NY received a $25,000 grant to expand its "cash-in-a-flash" program, which provides emergency loans up to $500 without a checking account or good credit history. Faith Community United Credit Union, Cleveland, OH, received a $50,000 grant to ease requirements for newer members. The credit union, which has a 30 percent membership below the federal poverty level, already has a non-invasive payday loan program that allows members to pay back loans gradually and encourages them to save and to take advantage of asset-building programs.
Copyright © 2005 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 14, No. 12, 1/05
First published on 01/01/2005