Payday lenders are being targeted by a new alternative product being rolled out by Langley Federal Credit Union.
Called Quick Cash, it can save borrowers hundreds of dollars in ridiculously high interest rates being charged by payday lenders, said Brett Noll, VP/CMO at LFCU.
"The idea originated from an advisory board that we have at Langley Air Force Base," he said, noting that it is the largest of many SEGs served by the CU with $1.46 billion in assets. "One of their great concerns is that a lot of base personnel are getting into a lot of financial difficulties due to payday lenders."
For example, he said, a $500 loan from a payday lender that typically charges interest comparable to rates ranging from 180% to 78%, would cost the customer $75 assuming they can pay it off in two weeks.
"Our solution was to create a product that looked similar to a payday loan but without the high interest," Noll said. A $500 loan from LFCU would cost the borrower $3.48.
President/CEO Jean M. Yokum called it the "smarter option."
"QuickCash certainly isn't a money maker," Yokum acknowledged. "We created this product to help people in need and give them a better, smarter option than paying ridiculously high fees. That's what credit unions are all about."
Noll said the hope is that it will open the door for those members who want to find out how they can improve their financial situations.
"When our members come in (for QuickCash), we can find other products that are right for them," he said. "We want to educate them and prevent them from getting into these types of situations again."
LFCU introduced the product in early June and expects it to be offered indefinitely. It will market specifically to military personnel via the base newspaper and to general membership via member newsletters, bus advertising, teller hand-outs and its website that gets "over a million page views a month," Noll said.
One ad that targets military personnel states, "You Protect Our Country, Now Protect Your Finances." It includes a blurb that explains how military bases across the nation have been "magnets for payday lenders" that make money by charging fees as high as $30 every two weeks per $100 borrowed "equal to a 720% annual interest rate."
