Credit unions are often seen as a kinder lender because they are member owned nonprofits. But now some of credit unions are branching into a controversial lending practice: payday loans. Consumer advocate Linda Hilton explains her fight against them in Utah.
It is really something that is a debt trap just waiting to suck you in to a downward spiral that you’ll never get out of the trap is payday loans but what infuriates consumer advocate linda hilton most is the new and unexpected vendor credit unions there’s still that feeling that they are going to treat you like family they’re going to treat you right and they are
Going to give you a good deal but that’s not always the case now many of these member-owned non-profits are branching into this controversial lending practice charging far more than they do for any other loan payday lenders appeal to people who can’t normally get loans but there’s a trade-off lenders charge very high interest rates around here the average is 15
Dollars per 100 per week what happens is that you didn’t have the hundred dollars this week and you don’t have 115 next week so you roll it over it adds up pretty fast at the end of six weeks of doing this you’ve paid more than 100 percent in interest hilton was shocked when she found that credit unions in her home state of utah were partnering with payday lenders
At mountain america one of the largest credit unions in the southwest annual interest on an average two-week my instacash loan is 312 percent it’s completely legal there’s nothing we can do to rein them in mountain america would not comment wendell sebastian executive director of the national credit union foundation said he’d never heard of mountain america’s
Partnership with my instacash but he said consumers should be wary of any product that charges extra high interest rates obviously if they were charging exactly the same as the payday lender they would be no better than the payday lender but sebastian said that most credit unions charge much less for their payday loans which makes them a fair deal for members it is
Very very tricky to understand and draw a distinction between real payday lenders and people who are making you short-term loans and trying to cover the cost of processing that loan and i realize that sounds you know like double speak but the motivation and the intentions of the person lending you the money really make all the difference in the world but hilton
Thinks that some credit unions are looking to profit from payday loans she said there is no other explanation for annual interest rates that exceed 300 percent it’s a better loan shark product but it’s still a loan shark product that’s why she started a campaign last year to force credit unions in utah to drop payday loans several did but mountain america has held
Out i expect better from my credit union i expect them to give me a fair loan at a fair price so you go in thinking that the credit union is working in your best interest and they’ve sent you to a loan shark it’s not right
Transcribed from video
Credit Unions Turn to Payday Loans By iwatchvideo
