A QUARTERLY PUBLICATION OF
MINT VALLEY FEDERAL CREDIT UNION
PaydayLoans
Deferred deposit loans, commonly known as
“payday loans” (also called cash advance loans,
check advance loans and post-dated check loans), have become an increasingly popular method
for consumers to access fast cash.
How it works
Bad credit? No credit? Not a problem. All a consumer needs to obtain a payday loan is a job, a
phone, a utility bill, a checking account, and a driver’s license. The borrower writes a personal
check payable to the lender for the amount he wishes to borrow, plus a fee- typically 10% to
25% of the check. The check is held for one to four weeks, usually until the customer’s next payday, at which time he either redeems the check by paying the face amount, or allows the check
to be cashed. If the borrower can’t afford to cover the check, he may roll it over for another term
by writing another check, which will result in another set of fees being added to the balance.
Consumers may be mislead into thinking that payday loans are a cheap and convenient way of
borrowing money for the short term, however, with average annual interest rates ranging from
390% to 871%, payday loans are no bargain. Consider this example:
Mint Valley
n Face value of a check: $200
n 15% fee: $30 n Amount paid to the customer: $170
n Lender receives $30, which translates to an APR of 458% if the loan is repaid in two weeks
n If it is rolled into a new payday loan, an additional fee of $30 is charged, the loan is raised to
$230, and the APR jumps to 917%
In other words, it cost $60 to borrow $170 for one month. Compare the costs to other types of
credit:
International Credit
Union Day
THURSDAY, OCTOBER 19
International Credit Union Day is a proud tradition dating back more than 50 years. On the third
Thursday of October, credit unions all over the
world join together to celebrate the many positive
ways we impact the lives of our members.
Credit unions make a difference in many ways,
working for the well-being of our communities
as well as our membership. With solid, low-cost
financial services and personal attention, we help
people achieve their financial dreams day after day.
In honor of International Credit Union Day,
October 19, we will be serving free refreshments
in the lobby. We look forward to seeing you!
Call For
Volunteers
Do you enjoy working as
part of a team? Do you
have a business or financial
background? If so, we hope
you will consider serving as
a volunteer member of our
Board of Directors. Please
contact the credit union for
further details.
Here Comes Your
Christmas Club
Money!
Shoppers can head to the stores, and tourists
can pack their bags! Our Christmas Club
Account members will receive their accumulated savings and dividends during
the first week of November. Funds will be
transferred to your Share Account. If you
would prefer to receive a check, please
contact the credit union.
A Christmas Club Account is an
easy, convenient way to save
– especially with automatic
payroll deduction. We’ll be
happy to explain all the details
and open your 2007 account.
Just call or stop by.
To Borrow $200 and Repay in One Month
Stay
Connected
Any Time, Anywhere
Whether you’re busy at work, in the
middle of holiday shopping, or just
relaxing at home, you can access your
credit union accounts quickly and
easily. Simply use our convenient
24-hour services:
• Online banking with e*teller
• Quick, convenient online Bill Pay
• Touchtone Teller, our automated
phone system
• VISA Check Cards, for easy
purchases and ATM transactions
We have designed each of these services to be user-friendly and secure,
so you can use them with confidence.
They are great time-savers during the
busy holiday season, or any time
of year!
HOLIDAY CLOSINGS
COLUMBUS DAY
Monday, October 9
THANKSGIVING
Thursday, November 23
DAY AFTER THANKSGIVING
Friday, November 24
CHRISTMAS
Monday, December 25
NEW YEAR’S DAY
Monday, January 1, 2007
Dividends
The following dividends were paid on
members’ accounts for August 31,2006:
Rate
APY
Share Savings
Accounts
1.00% ..... 1.00%
Club Accounts
1.00% ..... 1.00%
IRAs
2.00% ..... 2.02%
Money Market
Account
1.65% ..... 1.66%
Share Certificate
6-month
12-month
4.00% ..... 4.07%
4.50% ..... 4.59%
On May 31, 2006, dividends were declared by the
member-elected Board of Directors. Dividends are
paid out of credit union earnings, and therefore
cannot be stated in advance. Refer to your statement
for current rates. Rates subject to change. Call for
current rates.
APY = Annual Percentage Yield.
Financial Scoreboard
As of August 31, 2006
Type of Credit
Terms
Finance Charge
Total Payment
Credit Card, Cash Advance
19.9% APR, no grace period
2.5% fee
$8.41
$208.41
ASSETS
$16,733,951
LOANS
$12,367,195
Personal Loan
36% APR Cap
$6
$206
Payday Loan
$17.50 per $100, 15-day term
with 1 rollover
$70
$270
SHARES
$12,862,039
MEMBERS
2,105
Consumers often have difficulty repaying the entire loan when their payday arrives because it will
leave them with little or no money for their living expenses. Result: The consumer pays another
round of charges and fees and obtains no additional cash in return.
Collection tactics for payday loans can be very aggressive. A default on a payday loan involves a
worthless check, and some state credit laws allow for triple damages when a bad check is used
in a retail transaction. Lenders may also require customers to sign an “Assignment of Salary and
Wages” authorizing them to go directly to the borrower’s employer to ask for the amount owed to
be deducted from the borrower’s paycheck and paid to the lender.
Breaking the Payday Loan Cycle
The average payday loan customer makes eleven transactions a year - and maintains an endless
sequence of debt. If you find yourself caught in the payday loan cycle, follow the steps below
for relief:
n Analyze your financial situation in its entirety - set reasonable and achievable financial goals.
n Understand your earning potential: Can you work overtime, obtain a second job, or turn a
hobby into income?
n Review your expenses. Can you reduce or eliminate anything in the short or long term?
n Review your debt. List everything, then set priorities. Because the interest rates on payday
loans are well above other types of debt, treat it as a financial priority.
n Track your spending and regularly review your budget.
n Commit yourself to not using payday loans in the future.
n If you are using payday loans because you inadvertently overdraw on your account,
consider overdraft protection.
n Develop a savings plan. Three to six months' worth of expenses in an accessible savings
account is recommended, but anything is better than nothing. A hundred dollars set aside
for emergencies can save you a trip to the payday loan company.
n Understand the root of the problem. Are you spending beyond your means because you're
income is insufficient to live on, or because you're spending more than you need to on
non-necessities?
3325 WASHINGTON WAY
LONGVIEW, WA 98632
(360) 425-5444
FAX (360) 501-6662
WEBSITE/e*teller (online banking)
www.mintvalleyfcu.org
TOUCH-TONE TELLER
(360) 414-9414
E-MAIL
[email protected]
OFFICE HOURS
MONDAY - FRIDAY
9 AM - 5 PM
FRIDAY DRIVE-UP HOURS
8:30 AM - 5:30 PM
A financial education and counseling service called BALANCE is available
to you as a benefit of membership in the credit union. Their counselors
can help you make the adjustments to your spending plan in order to break out of the payday
loan cycle. Call (888) 456-2227 or check out their website - www.balancepro.net.
©MHM • (503) 636-1592
FALL 2006
FALL 2006
A QUARTERLY PUBLICATION OF
MINT VALLEY FEDERAL CREDIT UNION
PaydayLoans
Deferred deposit loans, commonly known as
“payday loans” (also called cash advance loans,
check advance loans and post-dated check loans), have become an increasingly popular method
for consumers to access fast cash.
How it works
Bad credit? No credit? Not a problem. All a consumer needs to obtain a payday loan is a job, a
phone, a utility bill, a checking account, and a driver’s license. The borrower writes a personal
check payable to the lender for the amount he wishes to borrow, plus a fee- typically 10% to
25% of the check. The check is held for one to four weeks, usually until the customer’s next payday, at which time he either redeems the check by paying the face amount, or allows the check
to be cashed. If the borrower can’t afford to cover the check, he may roll it over for another term
by writing another check, which will result in another set of fees being added to the balance.
Consumers may be mislead into thinking that payday loans are a cheap and convenient way of
borrowing money for the short term, however, with average annual interest rates ranging from
390% to 871%, payday loans are no bargain. Consider this example:
Mint Valley
n Face value of a check: $200
n 15% fee: $30 n Amount paid to the customer: $170
n Lender receives $30, which translates to an APR of 458% if the loan is repaid in two weeks
n If it is rolled into a new payday loan, an additional fee of $30 is charged, the loan is raised to
$230, and the APR jumps to 917%
In other words, it cost $60 to borrow $170 for one month. Compare the costs to other types of
credit:
International Credit
Union Day
THURSDAY, OCTOBER 19
International Credit Union Day is a proud tradition dating back more than 50 years. On the third
Thursday of October, credit unions all over the
world join together to celebrate the many positive
ways we impact the lives of our members.
Credit unions make a difference in many ways,
working for the well-being of our communities
as well as our membership. With solid, low-cost
financial services and personal attention, we help
people achieve their financial dreams day after day.
In honor of International Credit Union Day,
October 19, we will be serving free refreshments
in the lobby. We look forward to seeing you!
Call For
Volunteers
Do you enjoy working as
part of a team? Do you
have a business or financial
background? If so, we hope
you will consider serving as
a volunteer member of our
Board of Directors. Please
contact the credit union for
further details.
Here Comes Your
Christmas Club
Money!
Shoppers can head to the stores, and tourists
can pack their bags! Our Christmas Club
Account members will receive their accumulated savings and dividends during
the first week of November. Funds will be
transferred to your Share Account. If you
would prefer to receive a check, please
contact the credit union.
A Christmas Club Account is an
easy, convenient way to save
– especially with automatic
payroll deduction. We’ll be
happy to explain all the details
and open your 2007 account.
Just call or stop by.
To Borrow $200 and Repay in One Month
Stay
Connected
Any Time, Anywhere
Whether you’re busy at work, in the
middle of holiday shopping, or just
relaxing at home, you can access your
credit union accounts quickly and
easily. Simply use our convenient
24-hour services:
• Online banking with e*teller
• Quick, convenient online Bill Pay
• Touchtone Teller, our automated
phone system
• VISA Check Cards, for easy
purchases and ATM transactions
We have designed each of these services to be user-friendly and secure,
so you can use them with confidence.
They are great time-savers during the
busy holiday season, or any time
of year!
HOLIDAY CLOSINGS
COLUMBUS DAY
Monday, October 9
THANKSGIVING
Thursday, November 23
DAY AFTER THANKSGIVING
Friday, November 24
CHRISTMAS
Monday, December 25
NEW YEAR’S DAY
Monday, January 1, 2007
Dividends
The following dividends were paid on
members’ accounts for August 31,2006:
Rate
APY
Share Savings
Accounts
1.00% ..... 1.00%
Club Accounts
1.00% ..... 1.00%
IRAs
2.00% ..... 2.02%
Money Market
Account
1.65% ..... 1.66%
Share Certificate
6-month
12-month
4.00% ..... 4.07%
4.50% ..... 4.59%
On May 31, 2006, dividends were declared by the
member-elected Board of Directors. Dividends are
paid out of credit union earnings, and therefore
cannot be stated in advance. Refer to your statement
for current rates. Rates subject to change. Call for
current rates.
APY = Annual Percentage Yield.
Financial Scoreboard
As of August 31, 2006
Type of Credit
Terms
Finance Charge
Total Payment
Credit Card, Cash Advance
19.9% APR, no grace period
2.5% fee
$8.41
$208.41
ASSETS
$16,733,951
LOANS
$12,367,195
Personal Loan
36% APR Cap
$6
$206
Payday Loan
$17.50 per $100, 15-day term
with 1 rollover
$70
$270
SHARES
$12,862,039
MEMBERS
2,105
Consumers often have difficulty repaying the entire loan when their payday arrives because it will
leave them with little or no money for their living expenses. Result: The consumer pays another
round of charges and fees and obtains no additional cash in return.
Collection tactics for payday loans can be very aggressive. A default on a payday loan involves a
worthless check, and some state credit laws allow for triple damages when a bad check is used
in a retail transaction. Lenders may also require customers to sign an “Assignment of Salary and
Wages” authorizing them to go directly to the borrower’s employer to ask for the amount owed to
be deducted from the borrower’s paycheck and paid to the lender.
Breaking the Payday Loan Cycle
The average payday loan customer makes eleven transactions a year - and maintains an endless
sequence of debt. If you find yourself caught in the payday loan cycle, follow the steps below
for relief:
n Analyze your financial situation in its entirety - set reasonable and achievable financial goals.
n Understand your earning potential: Can you work overtime, obtain a second job, or turn a
hobby into income?
n Review your expenses. Can you reduce or eliminate anything in the short or long term?
n Review your debt. List everything, then set priorities. Because the interest rates on payday
loans are well above other types of debt, treat it as a financial priority.
n Track your spending and regularly review your budget.
n Commit yourself to not using payday loans in the future.
n If you are using payday loans because you inadvertently overdraw on your account,
consider overdraft protection.
n Develop a savings plan. Three to six months' worth of expenses in an accessible savings
account is recommended, but anything is better than nothing. A hundred dollars set aside
for emergencies can save you a trip to the payday loan company.
n Understand the root of the problem. Are you spending beyond your means because you're
income is insufficient to live on, or because you're spending more than you need to on
non-necessities?
3325 WASHINGTON WAY
LONGVIEW, WA 98632
(360) 425-5444
FAX (360) 501-6662
WEBSITE/e*teller (online banking)
www.mintvalleyfcu.org
TOUCH-TONE TELLER
(360) 414-9414
E-MAIL
[email protected]
OFFICE HOURS
MONDAY - FRIDAY
9 AM - 5 PM
FRIDAY DRIVE-UP HOURS
8:30 AM - 5:30 PM
A financial education and counseling service called BALANCE is available
to you as a benefit of membership in the credit union. Their counselors
can help you make the adjustments to your spending plan in order to break out of the payday
loan cycle. Call (888) 456-2227 or check out their website - www.balancepro.net.
©MHM • (503) 636-1592
FALL 2006
FALL 2006