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PA Treasurer McCord:  Innovative Payday Lending Alternative Saves PA Consumers $15 Million
Better Choice short-term loans protect borrowers from predatory debt

HARRISBURG – Pennsylvanians who need quick cash for an unexpected expense or to make ends meet have a “Better Choice” for short-term loans.  Since the program’s inception, Better Choice loans have saved consumers nearly $15 million in fees and interest typically associated with payday lending products.

“The economy is moving in the right direction, but the reality is that many people – even those who are working – are still having trouble making ends meet, perhaps because of a large, unexpected expense like a car repair,” said State Treasurer Rob McCord.  “Many of those people have too often turned to predatory, pay-day lenders to make it through to the next paycheck, but then they found themselves drowning in exorbitant fees and outrageous interest rates.  With the Better Choice program, we’re proud to give them an alternative.  This latest report is great news.  It shows people are taking advantage of the opportunity to avoid bad loans – and saving themselves millions in the process.”

Developed by Treasury and the Pennsylvania Credit Union Association, Better Choice loans are available at 79 credit unions with 222 locations in Pennsylvania, and additional credit unions continue to sign on.  Participating credit unions have made 43,000 loans totaling $20.5 million in volume since 2006.  During the final six-month cycle (July 1 – December 31) of 2010, 8,173 loans totaling $3.8 million were issued.

“Credit unions were founded on the principles of small dollar lending,” says Jim McCormack, President/CEO of the Pennsylvania Credit Union Association. “I’m pleased that credit unions throughout the Commonwealth are meeting the needs of their members. For many living paycheck to paycheck, a short-term loan can help meet unexpected expenses,” said McCormack.  “Every Pennsylvanian should be afforded access to loans at reasonable fees and rates.”

A typical $500 payday loan costs consumers $15 for every $100 borrowed for two weeks, or approximately $450 over 90 days.  A $500 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.

Total number of loans issued

Total $ Amount of Loans Issued

Total $ Amount of Consumer Savings vs. Payday Lender

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To learn more about Better Choice and a view a list of participants, visit



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