Payday Loans Can Profit CUs

BALTIMORE - (07/08/05) -- ASI FCU began offering its memberspayday loans because credit union officials were convinced memberswere being exploited by high-costs and fees being charged at areaservices, according to Audrey Cerise, CEO of the Harahan, La.,credit union. But the program need not be a money-loser and caneven add to a credit union’s net income, Cerise toldattendees of NCUA Board’s Member Deborah Matz PALs Conferencehere Thursday. “You don’t have to lose money,”said Cerise, of her credit union’s growing payday loanprogram that now offers a variety of lower-cost products and assetsbuilding programs. The program earned ASI FCU almost $1.8 millionin fees and income in 2004 and cost a little more than $1 millionto operate, for a net of $776,319. That comes out to $105.08 peraccount, she said. ASI FCU offers four payday products: the Stretchand Credit plans, which offer small, short-term loans up to 15%APR; the Asset Builder Plan, which requires borrowers to make adeposit each time they borrow funds and has the credit uniondeposit the loan fees into the member’s account for futureuse; and the Payday Lender Rebuilder Plan, which allows the memberto repay high-cost loans at other payday lenders.