Consumer-Focused Changes Super-Charge SECU's Payday Alternative!

Additional Millions to be saved by Consumers!

News provided by

Feb 28, 2011, 04:35 ET

RALEIGH, N.C., Feb. 28, 2011 /PRNewswire/ -- In a move designed to enhance its beneficial payday lending alternative potential for nearly 100,000 monthly Salary Advance Loan (SALO) participants, State Employees' Credit Union (SECU) is on-track to make consumer-focused changes to its maximum $500 loan product. For many of the program's regular users, SECU will be lowering the standard 12% interest rate to a share secured rate of 5.5%, reducing the members' interest costs by over 50%! The change is expected to save members over $400,000 in interest costs alone, providing much-needed relief to their monthly budgets. SECU is also enhancing the savings feature of the product – a move designed to increase SALO users' savings balances and earnings by more than $1.5 million!

Ten years ago the Credit Union introduced the Salary Advance Loan program as a low-cost alternative to payday lenders. Since the program's introduction, over 150,000 members have taken advantage of the affordable borrowing opportunity. One of the enhancements made to the program since its 2001 introduction was the addition of a savings component in 2003 requiring members to set aside 5% of each loan advance in a Salary Advance savings account. Since 2003, SALO participants have saved over $20 million in their accounts, and some members have accumulated savings in excess of $2,500. For members who have attained at least $500 of savings, the Credit Union is lowering the interest on their SALO loan from 12% to 5.50%. The interest rate will remain at the reduced rate as long as the savings balance is $500 or greater.

With the enhancement, SECU's required savings percentage will also increase from 5% of the loan amount to 7% --- a move designed to increase a member's chance of graduating from the Salary Advance Loan program into other long-term savings programs at the Credit Union! A typical $500 loan advance will now result in a savings deposit of $35 as opposed to $25. SECU is also exploring the possibility of a low $100 minimum-balance CD program as a future improvement to the program.

Bobby Gardner, SECU Senior Vice President of Loan Systems, states, "When the Credit Union began its SALO Program in 2001, it was designed as an alternative to high-cost payday lenders. What a wonderful alternative it has been for nearly 150,000 members, as the current program saves SALO participants an unbelievable $63 million each year in interest charges compared to typical payday lenders. We are pleased to be able to improve the program even further and add to the savings for many SALO users. SECU is continually looking for ways to help members keep money in their pockets and improve their financial lives. It's what we were designed to do 74 years ago when the Credit Union was chartered --- and it's what we strive to do today!"

About SECU

SECU is a non-profit financial cooperative owned by its members. SECU has been providing the employees of the State of North Carolina and their families with consumer financial services for over 70 years. Currently serving more than 1.6 million members, SECU provides services through 236 branch offices, nearly 1,100 ATMs, 24/7 Contact Centers and a website, www.ncsecu.org.

SOURCE State Employees' Credit Union