Payday Loans from Credit Unions | Comparisons and Precautions

Article bends the truth

Traditional payday loans and the ones credit unions offer are about as different as these cats.

I came across an interesting article on payday loans in the Las Vegas Review-Journal today. It bragged about credit unions in Nevada that now offers payday loans to its customers, supposedly at lower rates than traditional payday lenders.

But before you rush out to open an account at Nevada Federal Credit Union, you should know: You can get an instant payday loan online for the same amount or less than what credit unions charge, so don’t believe everything you read.

Story of Shawn Johnson

The Review-Journal article tells Shawn Johnson’s story: He’s a single father who sometimes needs payday loans to make ends meet.

At one point in the story, it says Johnson used to pay $79 for a two-week loan to a payday lender. I have a message for him and for anyone who has paid that much: You are going to the wrong payday lender. Most payday lenders do not charge nearly that much. Shop around for a new payday lender.

What’s the difference?

Regarding the short-term loans available at another bank, Review-Journal reports that:

Community One offers 30-day loans for $300, $500 and $700 with a fee of $15 per $100 loaned and an 18 percent annual interest rate for the 30-day loan period.

The fees for these payday loans are virtually identical to any payday loan you can get online EXCEPT payday lenders generally only charge a flat fee for their loans; they don’t layer an interest rate on top of it.

It’s always nice to have choices, but do your homework before you shake up your banking situation to take advantage of quick payday loans from a credit union. It might just be a waste of time.