HARRISBURG, Penn.-Now that a temporary budget is in place in Pennsylvania to allow state workers to get paid, CU members affected by the recent budget impasse are thanking their credit unions for bridging the income gap created by payless paydays.
More than 20 credit unions in Pennsylvania offered 0% or low-interest loans (Credit Union Journal, July 27) to tide workers over since the budget impasse that began on June 30.
At Pennsylvania State Employees CU, members were dropping off thank-you cards. "And we had some members in tears telling us how much they appreciated the loan," said PSECU VP of Marketing Barb Bowker.
The $3.4-billion credit union stepped in with a 0% loan that provides members with up to $1,000 per biweekly paycheck. Members do not have to pay interest on their balances for approximately 55 more days, after which the rate moves to 3.9% fixed on the existing balance at that time.
Bowker said PSECU prequalified 30,000 members before June 30, and 15,000 members advanced the loan for a total of $19 million. She noted there still could be more loan activity due to the final payless payday on Aug. 7. State workers begin receiving back pay this week.
The temporary budget will cover state workers for the fiscal year, as political parties and the state's governor, Ed Rendel, continue to wrangle over budget line items. "We learned a lot from this experience," said Bowker, who credited the team at PSECU for developing the product and delivering it to members smoothly.
State workers with poor credit may have been hit the hardest during the impasse, recognized the Pennsylvania CU Association, which recently asked member credit unions to make temporary adjustments to Better Choice - a payday lending alternative the league administers.
"If you have state employees who are credit worthy, the low-interest loans credit unions made available were fantastic," explained PCUA SVP Mike Wishnow. "The problem came from a certain cadre of state employees who have lousy credit. What do you do about them?"
The league asked 82 CUs that offer Better Choice to remove the $25 application fee and suspend the rule that prevents members from holding more than one Better Choice loan at a time, only for state workers during the budget impasse. The product comes with an 18% interest rate ceiling. With the temporary budget in place, the league is no longer asking CUs to adjust the loan's pricing.
