SAN FRANCISCO – Six local credit unions and the San Francisco Treasurer’s office kicked off a payday loan program yesterday to build on progress reaching the unbanked made by the two-year-old Bank on San Francisco.
The city will help market PayDayPlusSF and refer potential participants in the low-cost payday loan program to participating credit unions, which are: Patelco CU, San Francisco FCU, Spectrum FCU, Mission Area FCU, Redwood CU and Northeast Community FCU.
“We think this is a great opportunity for consumers,” said Anne Stuhldreher, a spokesman with the New America Foundation, which is helping organize the initiative.
The program will offer loans up to $500 for as long as six months at 18% APR, far below the typical rate for payday loans. The average fee will be about $10, depending on the credit union, which may reserve the fee for a savings account.
The Treasurer’s office offered the program to all two dozen credit unions and banks that participate in Ban on San Francisco, but so far the six credit unions are the only ones interested in offering the loans, said Stuldreher, who stressed the city’s involvement. “We found that it’s really important for a lot of people who have misgivings about financial institutions to have an official involvement like this,” she told The Credit Union Journal yesterday.
To become eligible for the short-term loans a participant must join one of the credit unions and open an account under the Bank on San Francisco terms.
Similar programs are being explored in Los Angeles, San Jose and other cities that have adopted the “Bank on” program begun in the Bay City two years ago.
