State Employees has long been a national leader in payday alternatives, now holding nearly $825 million in payday loans that were pegged at a 12% rate. Wright Patt, joined by the Ohio Credit Union League and the Filene Research Institute, helped form a payday CUSO last year with an eye toward nationwide expansion.

On "Lifeline Advance," Gardner of Family Trust said he was pleased that South Carolina lawmakers have taken notice "considering how important it is we show what we do to help low-income segments of the market."

Gardner, immediate past chairman of the South Carolina Credit Union League, said he hopes to interest other CUs in the state to join in offering similar payday products.

Under Lifeline Advance, borrowers must be CU members for 60 days and can receive a pre-approved credit line up to $500 at 18% with repayment required in 30 days.

Since its introduction in mid-May, more than 240 Lifeline Advance loans totaling $100,000 have been extended with expectations that number will reach above 500 by yearend.

Delinquencies so far have been manageable, said Gardner, "with only $8,500 in 30-days past due which is no bigger than any projected loss that you might get on a single car loan."

Under "Lifeline Advance," a borrower can get an advance of up to 100% of net pay, but must repay the full amount within a 30-day period.

In a press statement, Family Trust took note of the payday prohibition in North Carolina where payday loans "have became a source of legislative controversy" and have brought "a marked increase in the activity in South Carolina."

Like CUs have done elsewhere with required savings, Family Trust explained that the 5% rule or $25 "is not a fee and the member may elect to waive this requirement with their initial advance of the year when the program fee is applied."

Nonetheless, said Family Trust, "the 5% required savings is your money, but it will be restricted from withdrawal as long as you have any unpaid advances. The objective is to help you develop savings habits and hopefully break the habit of payday advances."

In crafting the product, Family Trust decided that based on research it has done across the country Lifeline "needed to look like an existing payday loan" or the potential user would not opt for it.

That means, he said, Family Trust would not check credit scores "or require an application for each advance."

However, a borrower must have a regular paycheck or source of income "and never caused a loss to the credit union," said a statement.

In local articles appearing about Lifeline, Gardner told reporters "not all borrowers are in poverty. Some are just poor managers."

Gardner stressed that Family Trust is determined to help borrowers addicted to payday borrowing adding, "if we just become another lender in the line, and all we are is the lowest-cost lender, then we're not helping anyone."

But Lifeline is designed to help those borrowers and "only time will tell," he said.

Gardner stressed that CUs like his need to point out to federal and state lawmakers their commitment to help "those of lesser means."

And a product like Lifeline "demonstrates to Chairman Thomas that we are." He was referring to William Thomas, the former California GOP Congressman and head of House Ways & Means Committee who took CUs to task on the tax-exemption and serving low income.

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