- A Better Choice loan must be paid in full before a borrower can take out another loan. This prevents a borrower from getting caught in a never-ending cycle of rolling over a loan on its due date and paying exorbitant fees for the privilege.
- Better Choice customers will be loaned an additional 10 percent that will be deposited in an interest-bearing savings account in the borrower’s name.
- Credit unions will offer financial counseling to Better Choice customers to improve their fiscal literacy and help them make smart long-term financial decisions.
- The Better Choice loan application fee will not exceed $25, regardless of loan size. Payday lenders commonly charge as much as $25 per $100 borrowed.
- The interest rate charged on Better Choice loans will not exceed 18 percent. Payday lending debt traps can lead to effective interest rates in excess of 500 percent.
- No credit check is required for a Better Choice loan.
- No collateral is required. A Better Choice borrower does not have to provide a post-dated check as security for the loan’s eventual repayment.
- The 90-day loan repayment term is considerably longer than most payday loans, which require payment in full by the next paycheck.
- Loan payments can be made in weekly, bi-weekly, or monthly installments.
Click here to view a program brochure and a list of
participating credit unions
Visit the PA Credit Union Association Online at
www.pacreditunions.com
“I applaud [the Treasury Department] for working with mainstream financial institutions to find a way to responsibly meet the immediate financial needs of Pennsylvania’s hard working families. I am particularly supportive of the financial education component of the Better Choice product. By linking short-term financial help with financial counseling, consumers can get the cash they need as well as the knowledge to create a better financial future.”
Victoria A. Reider
Acting Secretary, Department of Banking
“Pennsylvania’s credit unions commend [Treasury] staff for their diligent work in helping the Pennsylvania Credit Union Association develop a statewide alternative to payday lending. This program will allow many Pennsylvania working families keep more of what they earn and learn how to better manage their personal finances.”
Jim McCormack
CEO,
Pennsylvania Credit Union Association
"The absence of fair and responsible small loan products has led some desperate people into the clutches of the payday lenders. Finally, at least for the members of these credit unions, a fair and responsible alternative will now exist in Pennsylvania.”
Irv Ackelsberg
Philadelphia consumer advocate
