RALEIGH, N.C. – State Employees Credit Union has expanded its two-year old Salary Advance Loan Program (SALO), the credit union's low-cost alternative to payday lenders' services, to include a savings program SECU says "will allow members a better opportunity to break the payday-to-payday borrowing cycle." SECU introduced SALO in January 2001, and so far more than 24,000 of SECU's one million members are using the program, said SECU's VP of Personal Lending Bobby Gardner. Instead of members paying $30 or $40 in application fees to payday lenders and interest rates that can equal 200% to 900%, SECU charges members using SALO a minimal amount and an 11.75% interest rate on salary advance loans from SECU made up to $500, as long as the member's net paycheck is at least $500. Members participating in SALO have their paychecks deposited directly in to a SECU checking or savings account. The loan payment is deducted in full when their paycheck is deposited, and the loan is paid off immediately. Gardner said the program has saved members a lot of money and the credit union is pleased so many members have taken advantage of it. "But we realized we won't break the cycle of payday lending unless we gave them an incentive for saving," said Gardner. SECU's SALO Cash Account is the credit union's solution. The savings plan is tied to each new and existing Salary Advance Loan and is designed to help members build personal savings. Each time a Salary Advance Loan is made by SECU, the credit union deposits 5% of the advance in to the member's Cash Account. The savings earns the same interest rate as SECU's regular passbook accounts. Currently that's 2.0%. Money accrued in the savings account is not available for use as long as the member participates in the SALO program. "The idea is to break the member out of the payday borrowing cycle," said Gardner. The Cash Account program is effective March 1 and is mandatory for all SECU members participating in the SALO program. Gardner said members have been notified that use of the SALO program after that date assumes their acceptance of the terms of the program. To further assist members with learning to manage their finances, SECU has partnered with BALANCE, a California-based consumer credit counseling service. Use of BALANCE is available to all SECU members by calling a toll-free number 1-866-747-7328. "The Salary Advance Program has provided a valuable resource to our members who were being taken advantage of by payday lenders," said Phil Greer, svp of SECU's Loan Administration Department. "Many people are struggling with finances at this time, and we feel that it is our responsibility to provide our members with services that help them get back on their feet and stay there." SECU of North Carolina is the second largest credit union in the U.S. It has more than $10 billion in assets. -

ebarr@cutimes.com