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PA Treasurer McCord: Innovative Payday Lending Alternative Saves PA Consumers $12 Million
Better Choice short-term loans protect borrowers from predatory debt

HARRISBURG – Treasurer Rob McCord urged people who need quick access to cash to make a “Better Choice” when seeking short-term loans. Since the program’s inception, consumers have used Better Choice loans to make ends meet, saving $12 million in fees and interest typically associated with payday lending products.

“Many Pennsylvanians need their dollars to stretch further in these tough times – to help them avoid a costly ‘debt trap,’ Treasury is proud to support the unique Better Choice payday lending alternative,” Treasurer McCord said. “Better Choice short-term loans have helped families make it to Pay Day and help borrowers save millions in predatory fees and usurious interest rates.”

Developed by Treasury and the Pennsylvania Credit Union Association, Better Choice loans are available at 80 credit unions with 242 locations in Pennsylvania, and additional credit unions continue to sign on. Participating credit unions have made more than 35,000 loans totaling $16.7 million in volume since 2006. During the first half of 2010 (January 1 – June 30), 6,780 loans totaling $3.4 million were issued.

“I’m pleased that credit unions stepped up to the plate and are meeting the small-dollar borrowing needs of Pennsylvanians. Just as important, credit unions are also providing financial counseling to help assist borrowers with managing their money,” said Jim McCormack, President/CEO, Pennsylvania Credit Union Association.

A typical $500 payday loan costs consumers $15 for every $100 borrowed for two weeks, or approximately $450 over 90 days. A $500 Credit Union Better Choice loan costs consumers approximately $42.50 for the same 90 days. In addition, as a condition to receiving the loan, the borrower agrees that $50 of the borrowed funds is deposited into a savings account, which allows them to develop a savings habit. The program reinforces this wealth-building component by providing financial education in an effort to help borrowers make better financial decisions.

 To learn more about Better Choice and view a list of participants, visit www.PaCreditUnions.com.

Pennsylvania Treasurer Rob McCord is committed to increasing the economic security and prosperity of all Pennsylvanians. Before winning the statewide elected job of State Treasurer, McCord was a successful business leader. He is now focused on strengthening the state’s economy, managing investments to get strong returns for taxpayers, and helping to create good jobs and retirement security for Pennsylvanians. To learn more about Treasurer McCord's initiatives, please visit the Pennsylvania Treasury at www.patreasury.gov.

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