As credit card debt hits new high, PALs reassert their value for credit union members

Monthly bills, unexpected emergencies, and the subsequent credit card debt have been known to surprise. Rent due, and your credit union member found themselves with more month than money; tire blows out on the freeway and they don’t have funds available for the tow truck, much less the costly fix.

If consumers were asked as a whole whether they could get approved for, say, a $700 loan with a lesser fee, do you think they would be intrigued?

It turns out a growing number of American consumers are taking that offer. According to Pew Charitable Trusts, assisted by digital automation and access federally-chartered credit unions issued a record $227 million in small-dollar loans in 2022 through the National Credit Union Association’s (NCUA) Payday Alternative Loan (PAL) program, up 30 percent from 2019’s total of $174 million.

This increase in affordable, small-dollar loans benefits consumers in the fact that each loan represents hundreds of dollars in potential savings in contrast to high-cost predatory payday lenders, rent-to-own, check-cashing, or other similar outfits. Such growth means more low-income members or consumers with limited-to-no credit history have the opportunity to borrow funds quickly to cover urgent or unexpected expenses.


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