If you have a payday or cash advance loan, you’re probably paying extremely high interest rates and fees. And if you have to roll over your loan and pay even higher fees for that privilege, you may be caught in a never-ending cycle that’s digging you deeper into debt. Developed by the Pennsylvania Credit Union Association and the Pennsylvania Treasury, the Credit Union Better Choice Loan is a smart alternative to payday lending that helps you save more of your hard-earned money—and even start saving for your future.
Since the Better Choice program’s inception, Pennsylvania consumers have taken out 71,000 loans totaling $34 million – and have saved nearly $25 million in interest and fees typically associated with payday lending products.
An affordable, short-term loan
Unlike payday or cash advance loans, a Credit Union Better Choice Loan offers a longer, 90-day repayment term with lower fees and interest rates. In fact, you’ll never pay more than $20 for your application fee. And, you’ll pay only 18% APR—that’s considerably less than the 500% effective interest rates you may be paying on a payday loan. Plus, you’ll have the flexibility of making monthly, bi-weekly, or weekly loan payments. Learn more...
Better Choice loans differ from predatory payday loans in a number of important ways:
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 help them make smart long-term financial decisions.
The Better Choice loan application fee will not exceed $20, 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.