tfeltner at woodstockinst
06-05-2007, 02:51 PM
Woodstock Institute is pleased to release Cooperative Credit: How Community
Development Credit Unions are Meeting the Need for Affordable, Short-Term
Credit. This report evaluates the emergency loan products offered by six
credit unions participating in a joint program offered by the National
Federation of Community Development Credit Unions and JP Morgan Chase.
Participating credit unions include ASI FCU, Bethex FCU, Faith Community CU,
Northeast Community FCU, South Side Community FCU, and West Texas CU.
Download the full report at:
http://www.woodstockinst.org/component/option,com_docman/Itemid,1/task,doc_d
ownload/gid,753/
Unlike traditional payday lenders, which charge triple-digit interest rates
for emergency loans and structure them in a way that makes it difficult for
borrowers to meet anything more than the minimum interest payment, these
credit unions offer loans that are lower in cost and offer a number of asset
building components.
Many of the loan products required the borrower to deposit a portion of the
periodic loan payment into a savings account to help build a cushion against
future financial instability. The participating credit unions also worked
to develop long-term relationships with borrowers, having learned that
longer-term members had considerably better repayment records than new
members.
"Increasing the number of lenders competing to provide affordable short-term
loans is critical to driving down the cost of credit," says Marva Williams,
Woodstock Institute senior vice president. "These short-term credit
products can also serve as a model for larger credit unions and banks."
Several credit unions also used the credit reports of new borrowers to
educate their members and help them identify any errors on the report.
"Adopting consumer protections to prevent over-borrowing and encouraging or
requiring financial education contributes strongly to the success of the
product," says Williams.
---
Tom Feltner
Communications/Development Associate
Woodstock Institute
407 S Dearborn Suite 550
Chicago, Illinois 60605
(312) 427-8070 tel
(312) 427-4007 fax
www.woodstockinstitute.org
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Development Credit Unions are Meeting the Need for Affordable, Short-Term
Credit. This report evaluates the emergency loan products offered by six
credit unions participating in a joint program offered by the National
Federation of Community Development Credit Unions and JP Morgan Chase.
Participating credit unions include ASI FCU, Bethex FCU, Faith Community CU,
Northeast Community FCU, South Side Community FCU, and West Texas CU.
Download the full report at:
http://www.woodstockinst.org/component/option,com_docman/Itemid,1/task,doc_d
ownload/gid,753/
Unlike traditional payday lenders, which charge triple-digit interest rates
for emergency loans and structure them in a way that makes it difficult for
borrowers to meet anything more than the minimum interest payment, these
credit unions offer loans that are lower in cost and offer a number of asset
building components.
Many of the loan products required the borrower to deposit a portion of the
periodic loan payment into a savings account to help build a cushion against
future financial instability. The participating credit unions also worked
to develop long-term relationships with borrowers, having learned that
longer-term members had considerably better repayment records than new
members.
"Increasing the number of lenders competing to provide affordable short-term
loans is critical to driving down the cost of credit," says Marva Williams,
Woodstock Institute senior vice president. "These short-term credit
products can also serve as a model for larger credit unions and banks."
Several credit unions also used the credit reports of new borrowers to
educate their members and help them identify any errors on the report.
"Adopting consumer protections to prevent over-borrowing and encouraging or
requiring financial education contributes strongly to the success of the
product," says Williams.
---
Tom Feltner
Communications/Development Associate
Woodstock Institute
407 S Dearborn Suite 550
Chicago, Illinois 60605
(312) 427-8070 tel
(312) 427-4007 fax
www.woodstockinstitute.org
-------------------------------------------------------------------
This e-mail was sent to tfeltner@woodstockinst.org because you are
subscribed to at least one of our mailing lists. If at any time you would
like to remove yourself from our mailing list, please feel free to do so by
visiting:
http://www.woodstockinst.org/index.php?option=com_lm&task=unsubscribe&g=1&ad
dr=tfeltner@woodstockinst.org
This post transferred from the cdb-l mailing list