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Payday Loan Considerations for Credit Unions Lois I. Kitsch National Program Manager REAL Solutions ™
Strategy for Financial Success LOW WEALTH FAMILIES EDUCATION CREDIT TRANSACTION SERVICES SAVINGS PRODUCT  AWARENESS COUNSE...
Who are these REAL People? <ul><li>75% with income under $50 thousand </li></ul><ul><li>Women – 62% with children at home ...
R.E.A.L. People Use AFS Service Providers <ul><li>Check Cashers </li></ul><ul><li>Pawnbrokers </li></ul><ul><li>Call Cente...
A Credit Union Opportunity...  Really ?
Do Our Members Use Payday Lenders YES!!! 100% of Wisconsin Credit Unions 100% of Ohio Credit Unions 100% of Kansas Credit ...
Do Our Employees Use Payday Lenders YES!!! 50% of Wisconsin Credit Unions 67% of Ohio Credit Unions 75% of Maryland Credit...
Things to Think about… <ul><li>Target Market </li></ul><ul><ul><li>Members/Nonmembers </li></ul></ul><ul><li>Product compo...
Marketing <ul><li>Selling the product  </li></ul><ul><ul><li>Volunteers </li></ul></ul><ul><ul><li>Staff </li></ul></ul><u...
Telling the Story <ul><li>Tracking Results </li></ul><ul><ul><li>Members using </li></ul></ul><ul><ul><li>Dollars saved </...
Success Stories <ul><li>PG County Credit Union </li></ul><ul><li>Pot of Gold Savings </li></ul><ul><ul><li>Member savings ...
Sample Success <ul><li>Ohio credit unions  Stretch Pay </li></ul><ul><li>42 Participating Credit Unions </li></ul><ul><ul>...
GoodMoney Scorecard <ul><li>Active GoodMoney members:  630  Closed GoodMoney members:  535  Total GoodMoney members:  1,16...
Pennsylvania Credit Unions <ul><li>Started in October 2006 </li></ul><ul><ul><li>50 Credit Unions making loans 12-07 </li>...
Freedom Suite of Products <ul><li>St Louis Community Credit Union </li></ul><ul><ul><li>2 nd  change checking, Money Max C...
To Learn More <ul><li>Visit the NCUF Knowledge Center </li></ul><ul><li>Contact your League Liaison or your Field Coach </...
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Knowledge Center Payday Loans

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Transcript of "Knowledge Center Payday Loans"

  1. 1. Payday Loan Considerations for Credit Unions Lois I. Kitsch National Program Manager REAL Solutions ™
  2. 2. Strategy for Financial Success LOW WEALTH FAMILIES EDUCATION CREDIT TRANSACTION SERVICES SAVINGS PRODUCT AWARENESS COUNSELING STAFF TRAINING PAYDAY ALTERNATIVE SMALL LOANS USED CAR LOANS LOAN POLICIES STAFF AWARENESS LOW MEMBERSHIP FEE SAVINGS AWARENESS SAFE ACCOUNTS LONG TERM SAVINGS CHECK CASHING FEE FREE CHECKING MONEY ORDERS REMITTANCES TAX PREPARATION CREDIT UNION HOME OWNERSHIP HLPR LOAN COUNSELING STAFF TRAINING CREDIT SCORE
  3. 3. Who are these REAL People? <ul><li>75% with income under $50 thousand </li></ul><ul><li>Women – 62% with children at home </li></ul><ul><li>Young – average age under 42 </li></ul><ul><li>Educated – most have some college </li></ul><ul><li>Employed – 100% </li></ul><ul><li>Banked – 100% </li></ul><ul><li>Our members – estimated 20% </li></ul>
  4. 4. R.E.A.L. People Use AFS Service Providers <ul><li>Check Cashers </li></ul><ul><li>Pawnbrokers </li></ul><ul><li>Call Centers </li></ul><ul><li>Online Payday Lenders </li></ul><ul><li>Banks (very limited) </li></ul><ul><li>Credit Unions (more than banks) </li></ul>
  5. 5. A Credit Union Opportunity... Really ?
  6. 6. Do Our Members Use Payday Lenders YES!!! 100% of Wisconsin Credit Unions 100% of Ohio Credit Unions 100% of Kansas Credit Unions 91% of Maryland Credit Unions Of the 60 REAL Solutions Credit Unions Surveyed
  7. 7. Do Our Employees Use Payday Lenders YES!!! 50% of Wisconsin Credit Unions 67% of Ohio Credit Unions 75% of Maryland Credit Unions Of the 48 REAL Solutions Credit Unions Surveyed
  8. 8. Things to Think about… <ul><li>Target Market </li></ul><ul><ul><li>Members/Nonmembers </li></ul></ul><ul><li>Product components </li></ul><ul><ul><li>Education </li></ul></ul><ul><ul><li>Savings component </li></ul></ul><ul><ul><li>Terms/conditions </li></ul></ul><ul><ul><li>Delivery systems </li></ul></ul>
  9. 9. Marketing <ul><li>Selling the product </li></ul><ul><ul><li>Volunteers </li></ul></ul><ul><ul><li>Staff </li></ul></ul><ul><ul><li>Members </li></ul></ul><ul><ul><li>Potential members </li></ul></ul><ul><ul><li>Community </li></ul></ul>
  10. 10. Telling the Story <ul><li>Tracking Results </li></ul><ul><ul><li>Members using </li></ul></ul><ul><ul><li>Dollars saved </li></ul></ul><ul><ul><li>Program stats </li></ul></ul><ul><li>Telling the story </li></ul><ul><ul><li>Media </li></ul></ul><ul><ul><li>Law makers </li></ul></ul><ul><ul><li>Community </li></ul></ul>
  11. 11. Success Stories <ul><li>PG County Credit Union </li></ul><ul><li>Pot of Gold Savings </li></ul><ul><ul><li>Member savings for a specific purpose </li></ul></ul><ul><ul><li>3 or 5 years to accumulate $2,500; $5,000 or $10,000 </li></ul></ul><ul><ul><li>Current balance is 4.4% ($4 million) of credit union assets </li></ul></ul><ul><ul><li>1,000 members (of 12,000 members ) are using the program </li></ul></ul><ul><ul><li>The member can borrow from the fund for 3% over the savings current rate </li></ul></ul>
  12. 12. Sample Success <ul><li>Ohio credit unions Stretch Pay </li></ul><ul><li>42 Participating Credit Unions </li></ul><ul><ul><li>2007 Results </li></ul></ul><ul><ul><ul><li>8,900 Members </li></ul></ul></ul><ul><ul><ul><li>62,000 Advances </li></ul></ul></ul><ul><ul><ul><li>$2,480,000 loans disbursed </li></ul></ul></ul><ul><ul><li>3 Million Dollars Member Savings </li></ul></ul>
  13. 13. GoodMoney Scorecard <ul><li>Active GoodMoney members: 630 Closed GoodMoney members: 535 Total GoodMoney members: 1,165 Total number of loans: 8,272 Total dollar value of loans: $3,018,800 Average loan amount: $364.94 </li></ul><ul><li>Estimated savings over traditional payday lenders: $455,839 Referrals to FISC in 2005: 192 Referrals to FISC in 2006: 681 Referrals to FISC in 2007: 612 Total referrals to FISC: 1,485 Members currently in credit counseling: 27 Source: Prospera Credit Union </li></ul>
  14. 14. Pennsylvania Credit Unions <ul><li>Started in October 2006 </li></ul><ul><ul><li>50 Credit Unions making loans 12-07 </li></ul></ul><ul><ul><ul><li>65 credit unions currently </li></ul></ul></ul><ul><ul><ul><li>5,884 loans disbursed </li></ul></ul></ul><ul><ul><ul><li>$2,831,253 total disbursed </li></ul></ul></ul><ul><ul><ul><li>At least 350 users new members </li></ul></ul></ul><ul><ul><ul><li>Estimated Savings to Members - $2 Million </li></ul></ul></ul>
  15. 15. Freedom Suite of Products <ul><li>St Louis Community Credit Union </li></ul><ul><ul><li>2 nd change checking, Money Max Card and pdl alternative </li></ul></ul><ul><ul><ul><li>(product numbers for first six months of implementation) </li></ul></ul></ul><ul><ul><ul><li>774 members using product </li></ul></ul></ul><ul><ul><ul><li>1,114 advances done </li></ul></ul></ul><ul><ul><ul><li>275,000 current portfolio </li></ul></ul></ul><ul><ul><ul><li>Average loan size $336 </li></ul></ul></ul><ul><ul><ul><li>Loans disbursed $374,424 </li></ul></ul></ul><ul><ul><ul><li>Default rate 1.2% </li></ul></ul></ul><ul><ul><ul><li>27% interest with $25 annual fee </li></ul></ul></ul><ul><ul><ul><li>10% required savings </li></ul></ul></ul><ul><ul><ul><li>90 day terms </li></ul></ul></ul><ul><ul><ul><li>Rollovers allowed – no additional fee </li></ul></ul></ul>Estimated Savings to Members +$500,000
  16. 16. To Learn More <ul><li>Visit the NCUF Knowledge Center </li></ul><ul><li>Contact your League Liaison or your Field Coach </li></ul><ul><li>Contact NCUF – Jeff Purvis/Lois Kitsch </li></ul><ul><ul><li>800 356 9655 </li></ul></ul>
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