Two cheers for credit union

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The New York Times reports today ("Nonprofit Payday Loans? Yes, to Mixed Reviews" by John Leland) about a program between Goodwill and a credit union (a financial cooperative, thus the categorization) in Appleton, Wisconsin to help people jump out of a payday loan debt death spiral. The program -- which does move those least able to repay into counseling and an interest-free loan -- has some problems.

I wrote about the role credit unions could play in short-circuiting predatory lending before, and given the history of the cooperative movement, I would think it would have a strong role in this fight.

The Wisconsin program isn't without criticism; despite the need, the interest rate is still shockingly high: the equivalent of 252% compared to 572% with the storefronts. I can't help but think there should be an eighth-century prophet saying something about it, except that the sad thing is that (for some) 252% really is an improvement.

So two cheers for the credit union and Goodwill, and perhaps half a prayer to be shared for those drowning in debt.

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