High Fuel Cost Drives Northeastern CUs To Offer Loans For Heating Bills
Due to some of the highest fuel costs ever to face the nation, many credit unions in this northeastern state have decided to help members with low- or zero-percent interest loans to buy fuel for the winter.
The Maine Credit Union League told The Credit Union Journal that it conducted an informal poll of its 73 member credit unions and reports that fully one third are offering some sort of help simply out of service to its membership.
Linda Howe, senior VP of marketing with $50-million St. Croix Federal Credit Union in Baileyville said the credit union had started plans to buy fuel at bulk rate for its members, as it usually does before the onset of winter.
St. Croix officials spent the summer tracking high oil prices and then read media reports of zero-interest loans offered by credit unions in the Katrina disaster area. CU officials in this town roughly 20 miles from the Canadian border knew what they had to do.
"It's the right thing to do and the right time to do it," Howe said.
Starting Jan. 10, St. Croix FCU kicked off its loan program offering $500 with the first payment not due until May. The $500 loan figure was chosen as the amount of money required to fill a standard 250-gallon fuel tank and should be adequate to get through the toughest winter months.
Howe said many local residents have occupations related to the outdoors and simply can't work during the winter months resulting in the delayed first payment. Many of these same people will pick up a second job during the spring and summer.
St. Croix Federal decided to create the payback period during this period so its members will be flush with cash and capable of completing the loan by next September.
Howe said members qualify for the loan in a normal application process but the loan check is made out to a fuel provider, whether fuel oil, wood or pellets for stoves. St. Croix also postponed the start of the loan program until after the holiday season just in case a member would be tempted to use the loan money on an impulse buy.
"We know people who get this loan are going to stay warm," Howe said.
Recently, over just a two-day period, the temperature plummeted from a relatively "balmy" 51 degrees to only four degrees, Howe related as an example of the unpredictable weather this time of year. The program, she said, will run for 30 days and expects up to 300 loans will be granted.
St. Croix has relied on member word of mouth for advertising and Howe said local talk radio and news stations have picked up the story.
Further south in Dexter, Maine Highlands FCU brought out its loan program in October 2005 and will run it as long as necessary according to credit union CEO Rhonda Taylor. Taylor said the loans are being made up to $1,500, at 3%, for 12 months, and loan checks are being made out directly to fuel suppliers, as St. Croix Federal did with its members.
"We all looked at it as what we could do to help," Taylor said.
Taylor said around 35 members have taken out a winter fuel loan for a total of $40,000. Taylor said the loan amount is being repaid at $127 per month which is substantially lower than the $500 it would take to fill a home fuel oil tank especially for members with lower or fixed incomes.
Taylor said Maine Highlands is already planning for next winter regardless of what happens during this one.
"We all know prices aren't going down next year," Taylor said.