‘This is a social movement.’
Proponents of the industry point to the lifeline payday loans can provide for people like Tucker.
But there’s a growing movement of alternatives aimed at better supporting those in need. Tucker, for example, turned to the Holy Rosary Credit Union, which paid off her payday loan and issued her a new one with a much lower interest rate. She eventually repaid the credit union and moved on with her life.
Like banks, credit unions offer checking, savings and loan services. But unlike banks, which primarily serve shareholders, credit unions are nonprofit entities set up by members and governed by a volunteer board. Importantly, they generally charge discounted loan rates and lower fees than traditional banks.
A new credit union is set to open this spring in Kansas City, following an eight-year fundraising effort. The WeDevelopment Federal Credit Union is a community development credit union that will differ from most banks and traditional credit unions by specifically focusing on those who have never had access to a bank, or who have been shunned by banks because of past financial trouble.
Community development credit unions “believe in providing individuals with second, third and fourth chances,” says Paul Woodruff, vice president of community development at a community development credit union based in St. Louis.