USA FEDERAL CREDIT UNION ANNOUNCES TWO ALTERNATIVES TO PREDATORY “PAYDAY” LOAN - BREAKS RISKY CYCLE FOR MILITARY AND OTHERS

FOR IMMEDIATE RELEASE

San Diego, Calif., May 1, 2007– USA Federal Credit Union today announced two new loans designed to break the cycle of dependence on expensive predatory loans. The NOW! Loan and the Freedom Plan give military and private borrowers relief from the payday loan trap which has snared thousands of Americans.

“Payday lending is a one-way street to nowhere for young military families and others,” Mary Cunningham, President/CEO of USA Federal Credit Union said. Predatory “payday” loans can cost 400% or more.

According to recent DoD research, military service members are four times more likely to be payday borrowers than civilians. "The connection between military readiness at this time when our nation is at war and the marketing of payday loans outside of our gates is well-established," said RADM Len Hering, Commander, Navy Region Southwest. “Right outside our gates they market high-cost loans that trap our young men and women into a cycle of debt. Caught in these traps, these individuals can no longer do their jobs."

According to a recent report from the California Reinvestment Coalition, the highest concentration of payday lenders in the state is clumped around Camp Pendleton’s Marine base, north of San Diego. Around 70 lending offices are located near the base, looking to attract some of the over 60,000 military and civilian workforce.

According to a recent report from the California Reinvestment Coalition, the highest concentration of payday lenders in the state is clumped around Camp Pendleton’s Marine base, north of San Diego. Around 70 lending offices are located near the base, looking to attract some of the over 60,000 military and civilian workforce.

Cunningham announced USA Federal Credit Union’s answer to this serious problem: “We have designed two new, lower cost loans to break this vicious cycle,” she said.

• NOW! Loan -- A quick loan for small amounts of cash (up to $300) with no credit check or income verification. Funds are deposited into your USA Federal checking or savings account. Automatic payments are required and these loans can only be accessed four times in a six-month period. Instead of the 400% predatory loan rate, these loans carry an 18% APR on a required 3-month repayment plan.

• FREEDOM PLAN -- To escape the payday lending trap and excessive interest rates, this plan can provide up to $1,200 to qualifying members. One-half is paid directly to eliminate existing payday loans. The remainder goes into a Payday Saver account. Automatic payments are required. Free budget and spending counseling is provided to improve your financial health. Instead of the 400% predatory loan rate, these loans carry a 18%- APR on a 12-month repayment plan.

"The Department of Defense is aggressively seeking to improve the financial health of our active duty personnel, said CAPT Mark Patton, USN Head, Joint Task Force on Financial Health (Southwest). “But this cannot be done with education or legislation alone. When combined with financial education and counseling, payday loan alternative products, like those proposed by USA Federal Credit Union, provide access to needed credit, at reasonable rates, and help to reduce the financial stress on our service personnel and their families."

Recent Federal legislation, set for 2007 implementation, capped payday loans to military families at 36%. The USA Federal Credit Union loans come at a time when payday loan companies say they will stop lending to the military in light of that cap.

Recently, Sheila Bair, chairwoman of the FDIC, said there is a "pervasive need for more responsibly priced small-dollar loans. "All of us -- regulators and (lenders) -- have a duty to help these individuals and their families develop alternative, affordable options so they can meet their credit needs. These alternative products could be used to address an immediate financial need or simply to help them regain their financial footing."

“We want our members to have a reasonable alternative to extremely expensive payday loans,” Cunningham concluded. “We want them to escape this trap and our new programs are designed to help.”

     Founded in 1953 at the Naval Training Center in San Diego, USA Federal offers a full range of financial services, including business services and consumer savings, checking, mortgage and home equity loans, auto loans, debit and credit cards, share term certificates, IRAs and a 24-hour phone center.
     Online services include eStatements, QuickConnect Online and Bill Pay, as well as online loan applications and approval. Additional services include the BALANCE financial fitness program and investment and retirement planning offered by MEMBERS Financial Services.
     With more than 59,000 members and over $700 million in assets, USA Federal Credit Union operates 22 branches, including locations in San Diego and Riverside Counties, Las Vegas, Japan and Korea. Members of the non-profit financial cooperative include the military, civilians and select employee groups.
     USA Federal Credit Union is federally insured by the National Credit Union Administration. For more information, call (800) 220-1USA or visit www.USAFedCU.org.

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Note: USA Federal maintains the above information for archival purposes, which is presumed accurate upon release, however, data may become outdated over time and affect accuracy.