After five years of fighting for state regulations on predatory lending, Superior leaders might have found a solution to help break the downward spiral of payday loans.

It didn’t come from Madison or by city decree.

The remedy came from a local credit union.

By January, Superior Choice Credit Union will be offering Good Money loans, a product similar to a payday loan at half the price.

“It’s a great private-sector answer to predatory lending,” said Superior Mayor Dave Ross. “You’re doing cutting-edge things here for the poorest borrowers in the community.”

Predatory lending has a firm foothold in Wisconsin, the only state in the nation with no regulations on the practice. In 1996, there were 64 payday lending outlets in the state, according to the Wisconsin Department of Financial Institutions. Currently, there are 512, seven of which do business in Superior. The annual interest rate for a payday loan ranges from 542 percent to 780 percent.

Ross and Superior Public Works Director Jeff Vito have traveled to Madison many times to call for state action. The Superior City Council has restricted where payday and title loan businesses can set up shop and how close they can be to one another.

The Good Money program was developed in 2005 by Prospera Credit Union in Appleton, Wis. It has earned national recognition and praise from Gov. Jim Doyle. Providing the short-term payday loan alternative is a leap in the right direction, Ross said. It is also a chance to meet the needs of clients.

“It goes to the core values of credit unions, people helping people,” said Sandy Zander, second vice president of SCCU.

An average of 75 checks from predatory lending businesses are cashed at SCCU a week, said Annie Lepper, SCCU marketing director.

“We want to give them a better option,” she said.

Good Money loans are a good deal. While most payday loans charge $20 to $30 per $100 borrowed every two weeks, SCCU will charge less than $10. After a month, the Good Money borrower would owe $120, compared to $160 for a traditional payday loan.

The credit union also has partnered with LSS Financial Counseling, a division of Lutheran Social Service of Minnesota, to provide long-term solutions for members. LSS offers budget and debt counseling, foreclosure prevention services, credit report reviews, reverse mortgage counseling and even bankruptcy counseling. Credit union customers can see an LSS counselor within a few days of requesting help; the normal wait is four to six weeks.

“Our goal is to migrate them out of payday lending to conventional lending,” said Gary Elliott, SCCU president. “We want them to be a traditional member.”

Source:
http://www.duluthnewstribune.com/event/article/id/78237/