State Employees' Credit Union is reporting that members are saving approximately $2.8 million each month in total by using SECU's Salary Advance Loan (SALO) Program.
The program, which debuted in 2001, saves each of its 40,000 active participants at least $70 per month, SECU said. It is designed to be a low-cost alternative to borrowing from payday lenders. More than 53,000 SECU members are enrolled in the SALO program, with 40,000 of those members borrowing from SECU each month.
SECU's SALO Loan has an annual percentage rate (APR) of just 12%, as compared with APRs over 200% from commercial payday lenders, SECU said. There are no fees, and members may borrow up to $500 per month. To assist members in actually breaking the payday borrowing cycle, SECU launched the SALO Cash Account in 2003. The SALO Cash Account is a savings account that automatically deducts 5% of the borrowed amount and places it in a savings account for the member to establish a "rainy day fund." Members, most with no previous history of savings, have now accumulated over $8 million toward their future economic freedom.
