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SALT LAKE CITY -- The Coalition of Religious Communities is calling some Utah credit unions to task for some of the loan programs they offer.
America First Credit Union, Mountain America Credit Union and Cyprus Credit Union are among eight Utah credit unions that offer members alternatives to payday loans -- that's more than any other state.
If it looks like a payday loan, smells like a payday loan, it is a payday loan.
–Linda Hilton, Coalition of Religious Communities
The coalition held a news conference Tuesday outside one of the credit unions that offers the high-interest, unsecured, short-term loans.
"If it looks like a payday loan, smells like a payday loan, it is a payday loan," said Linda Hilton, executive director of the Coalition of Religious Communities.
Hilton also presented a report by the National Consumer Law Center that characterized the payday alternatives as small loans with steep rates. Several offer 0 percent interest loans, but for every $100 borrowed you pay a $12 fee. Compounded each bi-weekly paycheck, that adds up to an annual percentage rate of 288 percent.
"Credit unions that are supposed to be looking out for the people are offering payday loan products to their customer that are between 254 percent and 318 percent interest," Hilton said.
But Scott Simpson, of the Utah League of Credit Unions, claims many of the loan programs being offered now by credit unions were the result of a "clamor" by some of the same people to get them to offer more alternative loan programs.
As for the interest rate, Simpson said it isn't fair to look at an annual percentage rate on loans that typically last no longer than 30 days. He also said the programs credit union offers are around half the cost as the independent payday lenders.
Credit Union payday loans
| Lender | Interest | Fee | Term | APR with Fees |
|---|---|---|---|---|
| <a href=https://www.e-accessloan.com/newlayout/?lender=alliance>Alliance Credit Union</a> | 18% | $59 monthly | 30 days | 254% |
| <a href=https://www.e-accessloan.com/newlayout/?lender=america_first>America First Credit Union</a> | 18% | $20 monthly | 30 days | 254% |
| <a href=http://www.cuonpayday.com/cyprus/>Cyprus Credit Union</a> | 0% | $12 per $100 | Next payday | 288% |
| <a href=https://www.e-accessloan.com/newlayout/?lender=family_first>Family First Federal Credit Union</a> | 18% | $59 monthly | 30 days | 254% |
| <a href=http://www.cuonpayday.com/heritagewest/index.php>Heritage West Credit Union</a> | 0% | $12 per $100 | Next payday | 288% |
| <a href=http://www.myinstacash.com/>Mountain America Credit Union</a> | 0% | $12 per $100 | Next payday | 288% |
| <a href=http://www.cuonpayday.com/swfcu/>SouthWest Federal Credit Union</a> | 0% | $12 per $100 | Next payday | 288% |
| <a href=http://www.cuonpayday.com/usuccu/>USU Charter Credit Union</a> | 0% | $12 per $100 | Next payday | 288% |
"It is a little bit cheaper," Hilton argued, "but it still is a very high-interest, predatory loan."
Hilton said in North Carolina, where payday lenders have been banned, many people have found more appropriate ways to manage their debt.
Simpson said some credit unions also offer counseling to its members.
"We're trying to offer a product that still mitigates the risk of all the other deposits that are in our institution and provide another pathway for traditional banking lending practices," Simpson said.
The coalition sent letters to the credit unions, urging them to pull the products.
The credit unions say less than 1 percent of their membership request these loans. They say the loans are not a core product, and they hope to transition those borrowers to traditional loans when they are able.
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Story compiled with contributions from Marc Giauque and Jed Boal.
