SUITLAND, Md. — The $808 million Andrews Federal Credit Union has begun offering its members an alternative payday loan program.

The credit union began offering its “Cash to Go” to its members in October 2007. The CU described the product as a “lower cost alternative to those who rely on payday loan sorts of products the meet their cash needs” and added that the product's goal was not to make money.

The product does not have any fees and does not require a savings or checking account, although the members are required to have direct deposit with the CU or the member to show three pay stubs as proof of employment.

Andrews members will be able to use the program to obtain a short-term loan equal to a maximum of 75% of their standard paycheck, the CU said.

Debbie Matz, former NCUA Board member and now acting president/CEO of Andrews, explained that the CU, which serves members of the military as well as residents of nearby Washington, D.C., felt the need to start offering the product after Washington capped payday loans at 36%, a factor that payday lenders have said will force it to leave the city.

“We recognized a need for this product and wanted to help in any way we could,” said Matz, who added that the product has proved popular so far although there was not yet enough information to get a sense of whether it was costing Andrews money and, if so, how much.

Meanwhile, payday lending in the neighboring state of Virginia got a lease of life in a tentative legislative compromise in the House of Delegates.

Opponents of the controversial industry had tried to restrict payday lenders to changing 36% interest on their typically two week loans, a move which the industry said would result in their being chased from the Commonwealth.

The compromise that Virginia lawmakers have brokered still caps the loans at 36%, but allows the lenders to continue charging fees, according to published media reports, and increased the maximum time permitted to repay the loans from two to four weeks. The legislation would also cap the number of payday loans an individual could have to no more than five per year.

Observers noted that the legislative compromise only applied to the House of Delegates and the legislation still has to move through the Senate.

Lobbying in favor of payday lending in Virginia drew particular CU attention after a contract lobbyist for the Virginia Credit Union League was also found to be lobbying for the payday lenders trade association. Navy Federal Credit Union disassociated from the league after it refused to drop the controversial lobbyist.

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