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CU Community CU to Launch Payday Lending Alternative

CU Community Credit Union (Springfield) will roll out the Fresh Start Loan Program, a more affordable alternative to traditional payday loans, in 2016 to provide much-needed relief to people struggling in the payday loan debt cycle.

"There are many people in Greene and Christian Counties who are drowning in debt, and they turn to other costly solutions to solve short-term liquidity problems," says Judy Hadsall, CU Community Credit Union President/CEO. “Our hope is that we can help fill in the gaps where other financial products haven’t been able to provide assistance and create a lasting impact for people’s financial well-being."

The U.S. Treasury recently awarded $1,988,750 in grant dollars to CU Community Credit, which the credit union plans to use to roll out the new loan program. CU Community is certified by the U.S. Treasury Department as a Community Development Financial Institution (CDFI) – a specialized financial institution that works in underserved markets.

The need for credit building and debt consolidation to reduce the burden of poverty is greater in Springfield than almost anywhere in the state. Approximately 26% of Springfieldians are living at or below the federal poverty level. Many are working two jobs to try to make ends meet. Despite relatively low unemployment rates, the Federal Reserve has designated the community as in “severe fiscal distress” due to the high incidence of poverty. According to the Missouri Division of Finance, nearly two million payday loans were issued in Missouri from Oct. 2013 to Sept. 2014. The average amount of each loan was nearly $310 and the average annual percentage rate (APR) was almost 452 percent. Payday loan borrowers in Missouri can roll over their loans up to six times, but each time they do so, additional fees accrue.

“Our Fresh Start Loan Program provides members access to small, short-term loans with reasonable rates and fees,” says Hadsall. “Our financial specialists will work with members to determine if this product is the right fit for their situation and to help them consolidate their existing payday loans so that they get out of the debt cycle faster.”

CU Community Credit Union plans to launch the following loan products in 2016:

  • Payday Loan Alternative
  • Credit Builder Loan
  • Payday Consolidation Loan
  • Title Loan Alternative

The Fresh Start Loan Program will give people in Greene and Christian Counties the opportunity to build and repair credit, break the payday lending cycle, and consolidate their existing payday loans or other short-term loans that have high interest rates. Participants can enter the program with no credit check, and CU Community Credit Union will provide access to mainstream banking services such as checking accounts with debit cards, online and mobile banking, and a network of nearly 30,000 free ATMs nationwide.

To help get the word out about Fresh Start Loan Program, CU Community Credit Union has teamed up with the City of Springfield and several local non-profits, including Community Foundation, Community Partnership, Consumer Credit Counseling Services, Council of Churches of the Ozarks, Faith Voices for Southwest Missouri and the Ozarks Area Community Action Corporation.

Caption:  Pictured are the CU Community Credit Union management team (from left): Susie Kasterke, Vice President of Operations; Greg Snyder, Executive Vice President and Chief Financial Officer; Judy Hadsall, President and CEO; Alisa Lawler, Vice President of Business Development; Tanja Kern, Vice president of Marketing.