Making Payday Loans Honorable and Profitable For Your Credit Union

Payday loans tend to bring to mind Hollywood-crafted images of tall, beefy men in grey suits, slicked back hair and Italian accents.  In reality, loan sharks and your average store-front payday loan shops have given payday loans a bad rap.  But people are still applying for them—YOUR people (err…members)— and they are still being cheated out of their hard-earned money.

CREDIT UNION JUSTIFICATION
Members generally with lower credit scores seeking lower loan amounts tend to not be the most sought after business for most financial institutions. Many credit unions have justified not getting into the payday lending arena because, “It’s just not best for the member to borrow in these types of circumstances.”
But some credit unions are beginning to reconsider this due to the huge demand, paired with the desire to protect members from predatory lending.  Quoted in a “CU Times” article, Mark Allen, SVP of mortgage and investment at Washington State Employees Credit Union declared, “Credit union payday loan alternatives bring better products to market that benefit consumers by offering lower rates and more favorable terms.”

Q-CASH
When WESCU began investigating payday lending, “… [W]e began asking questions:  How many members were going outside the credit union to get a product we didn’t offer?”  Allen and his team discovered, “WSECU members had borrowed more than $6 million from storefront payday lenders, paying more than $900,000 in interest during the previous year.”
In response, WESCU created Q-Cash to satisfy a payday loan alternative. Q-Cash “has the convenience factor, but with better rates ($12 per $100 borrowed; 20 points below the market rate) and longer terms (60 days),” said Allen.

EVERYONE'S DOING IT
Check out North Carolina State Employees Credit Union. They created a short-term loan with a 12% interest rate and maximum limit of $500.00. "We wanted to find a way to get our members out of this trap," says Jim Blaine, SECU president in a recent USA today article. Members of North Carolina State Employees Credit Union are sure to appreciate this program since the state of North Carolina has recently been hit with over 75 tornado's and we all know insurance companies aren't quick to hand out cash.

HAPPY ENDINGS
Is there a happy ending to this story? Allen believes there is: “Both in our pricing and overall service model, WSECU has found what we believe is solid middle ground: offering a better short-term loan product for credit union members at fair rates and terms that benefit consumers and allows for a sustainable line of business.” SECU also has a happy ending for their members: “Each month, more than 40,000 people use the product, which has a maximum 31-day term. Overall, members have accumulated $10 million in savings accounts.” Happy endings don’t just happen in Hollywood.

1. Allen, Mark. “Payday Loans Are Credit Unions’ Business.” Editorial. Credit Union Times Hoboken. 22 Dec. 2010: 12. Print.
2. Krchhoff, Sue. “Breaking the cycle of payday loan trap.” http://www.usatoday.com/money/perfi/general/2006-09-19-credit-unions-usat_x.htm

Serving It Up Fresh, Right and Friendly On Paper: Third Degree Writes a Book!

Third Degree Advertising is writing a book! It’s not full of shameless self-promotion (although Roy’s bio is pretty awesome!) but it does contain case studies from credit unions that have been super successful. (We just have to brag on our clients— they are awesome!)  We simply want to share with you what we’ve seen first-hand as the most successful credit union marketing programs.

WE <3 CREDIT UNIONS
In short, we want to share our experience and expertise with YOU, credit union marketers and CEO’s. You have a tough job and we know every little bit helps. That being said, each paragraph and page of Credit Union Savvy was written with YOU and your needs in mind. Since we can’t work directly with everyone (Hey, our research, creative and media teams can work some pretty amazing marketing magic but our powers can only stretch so far!) this is a natural step in our efforts to further the credit union movement.

THE SAVVY-NESS CONTINUES

So, here it is! Credit Union Savvy  A compilation of our best thought leadership pieces to date in an easy-to-read, short story format.  Just for you. Our hope is that not only will our brightly-colored cover look great on your desk or bookshelf but that it will inspire you and your people both creatively and strategically. There’s a lot of smart stuff in Credit Union Savvy and we hope you put the information to good use!

FREE FRIDAYS
When you are the author of your own book, you can do all kinds of cool stuff like give one away every Friday, which is exactly what we are doing! Every Friday (until the book releases in May), you can follow us on twitter @thirddegreeadv or @CU_Cheerleader and we’ll let you know how you can win a FREE copy of Credit Union Savvy!  You can go to credit union savvy  for a link to buy the book on Amazon.

We wrote a book and hey, we’re even giving some away from free. Now, there is no reason for your credit union to NOT Read On and Fight On!  And never forget, you are powerful people, people.