Conservative Viewpoints

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Family Trust FCU offers payday loan alternative

Posted by Stephen on July 22, 2007

The Lifeline Advance Loan

Effective April, 2007 Family Trust Federal Credit Union is offering members an alternative to the high-rate “payday advance loans” that have become a source of legislative controversy. Since North Carolina passed legislation prohibiting payday lending, there has been a marked increase in the activity in South Carolina .

Family Trust FCU describes their reasons for offering the program and the steps you need to take to take advantage of the continued growth in alternatives to the predator loan programs provided by payday lenders:
We understand there are times of emergency when a member may need a relatively small amount of money for a short period of time until their next paycheck. The traditional payday lenders take advantage of the situation by charging annual percentage rates as high as 600 to 900% or even higher.
Our alternative will be called the “Lifeline Advance Loan” and it will work substantially like the payday lender loans but at a fraction of the cost. Here are the features of our Lifeline Advance Loan and how it will work:  

You must be a member of the credit union for at least 60-days.

The Lifeline Advance Loan is a pre-approved line-of-credit for $500. You may get advances up to 100% of your net pay, not to exceed $500, and you must re-pay the full amount within a 30-day period.

The annual percentage rate (APR) will be 18%. For a $500 advance that is outstanding for the full 30-days, the member will pay $7.40. You pay interest only for the number of days that you have the advance, so you may pay less.

Participants in the Lifeline Advance program will pay an annual fee of $35. This fee will be collected from the first advance made each calendar year. Once this annual fee is collected, there are no other fees for this service. Family Trust does not charge any fee to make individual advances or to rollover an advance.

To qualify for the Lifeline Advance program you must have been a member of the credit union for 60-days and provide very basic information when you sign-up. You must have a regular paycheck or source of income and never caused a loss to the credit union. We DO NOT check credit or require an application for each advance. Advances will always be instantly available as long as you have repaid previous advances.
Our Lifeline Advance Loan has an additional feature called the pay yourself first. With each advance we will deposit the first 5% into your savings account. So for a $500 advance we will put $25 into your savings account and you will receive $475. The $25 is not a fee and the member may elect to waive this requirement with their initial advance of the year when the program fee is applied. The 5% required savings is your money, but it will be restricted from withdrawal as long as you have any unpaid advances. The objective is to help you develop savings habits and hopefully break the habit of payday advances.
To learn more or to sign-up for the Lifeline Advance Loan please call or visit any branch office of Family Trust. Let us help you break the payday loan habit.


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