The Filene Research Institute is testing two pilot programs, the financial services think tank said Monday.
The Pay Yourself Back program was a submission from New Haven, Conn.-based policy research organization Innovations for Poverty Action. It directs loan payments into a savings account after the borrower repays the loan.
The Employer Sponsored Small Dollar program partners credit unions with participating SEGs to coordinate loans that can serve as an alternate to payday lenders. Employers and credit unions can coordinate repayments to come out of directly deposited paychecks. Like the Pay Yourself Back program, borrowers place the payments into savings accounts after they repay the loans.
Two other program pilots, which have already found hosting credit unions and begun their tests, are Non-Prime Auto Lending, a program that helps credit unions fairly price and offer auto loans to lower income members, and Borrow and Save, a payday loan alternative program that allows credit union members to repay small dollar loans over a longer term and establish a savings plan.
Filene is still seeking credit unions willing to host its Trust Card Debt Reduction Program, which consolidates loans into new, low rate credit card accounts as a means of debt reduction and financial education.
Filene said Pay Yourself Back will be hosted at six credit unions, including Educators Credit Union, Racine, Wis.; District Government Employees Federal Credit Union, Washington, D.C.; Cooperative Federal Credit Union, Syracuse, N.Y.; Holy Rosary Credit Union, Kansas City, Kan.; Brooklyn Cooperative Federal Credit Union, Brooklyn, N.Y.; and CTA C&M Credit Union in Chicago.
The Employer Sponsored Loan program has 14 credit union hosts, including Fitzsimons Credit Union, Aurora, Colo.; Credit Union of the Rockies, Golden, Colo.; Denver Community Credit Union, Denver; Metrum Credit Union, Centennial, Colorado; Holy Rosary Credit Union, Kansas City, Mo.; State Employees Credit Union, Buffalo, N.Y.; Spring Bank, Bronx, New York; Promedica Federal Credit Union, Toledo, Ohio; Sun Federal Credit Union, Maumee, Ohio; Toledo Urban Credit Union, Toledo, Ohio; Commodore Perry Federal Credit Union, Oak Harbor, Ohio; Toledo Metro Credit Union, Toledo, Ohio; Cy-Fair Federal Credit Union, Houston; and North Country Federal Credit Union, Burlington, Vt.
“Since the Federal Credit Union Act of 1934, credit unions have been promoting thrift and meeting the credit and savings needs of consumers, especially persons of modest means,” said Cynthia Campbell, director of innovation labs. “It is a part of who they are as not-for-profit, member owned organizations. It makes sense they embraced Pay Yourself Back because it is another tool to help their members save money.”
Campbell said even though Filene started the tests at different times, the organization will have at least 12 months' worth of data to evaluate next year.
Filene's accessible financial services incubator is a project funded by a $700,000, 30-month grant from the Ford Foundation. If any of the five new financial products and services are found to be sustainable for credit unions and beneficial for credit union members, they will be made available to credit unions and other financial institutions.
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