As credit card debt hits new high, PALs reassert their value for credit union members
![](https://www.cuinsight.com/wp-content/uploads/2016/01/bigstock-banking-loan-or-cash-concept-85936211-e1452172303169.jpg)
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.
continue reading »