Lending Survey: Some CUs Target Members With Summertime Loans
A recent survey finds 26% of people will spend more than $2,000 for summer activities.
A prudent family with a 5-year-old might want to save for a vacation to Disney World, but they might just find the anticipated glow of wonder has turned to a glare if their child turns 15 by the time they’ve got the cash.
A survey by AmOne, a Fort Lauderdale, Fla., company that offers small loans online, found 26% of 543 respondents expect to spend an extra $2,000 or more during the summer months than they do during the rest of the year. Their spending expectations for the summer were:
- 8% no extra spending
- 29% $500 or less
- 37% $501 to $2,000
- 15% $2,001 to $5,000
- 11% more than $5,000
About a third of the extra summer spending was directly for vacations and travel. Another third was for utilities, home improvement, childcare and children’ activities. The use of the rest was not specified.
Overall 17% of the respondents borrowed for summer spending. Among those whose spending rises $500 to $2,000, only 11% used credit cards or other loans, compared with 43% for those whose spending rises by more than $2,000.
According to AmOne, personal loans sometimes can be a better deal than credit cards for larger amounts. Federal Reserve data shows the average credit card balance is charged 17.14% interest, compared with 10.63% for the average personal loan.
As a rule, consumers shouldn’t use long-term finances for short-term purchases, but there are exceptions, said Gina Pogol, a personal finance expert for AmOne.
“Summer spending is a highly-individual decision,” Pogol said. “Your children may be Disney-aged only once, and you might want to finance those memories before they become teenagers.”
Members of Collins Community Credit Union of Cedar Rapids, Iowa ($1.2 billion, 85,870 members) often request personal loans for vacations or home improvement projects, branch manager Michelle Wilfer told AmOne.
“I am not surprised by these poll findings based on what our members state when they come in for loans and credit cards during the summer,” Wilfer said.
Many credit unions advertise personal loans for vacations on their websites. A sample of terms includes:
- MembersFirst Credit Union, Decatur, Ga. ($245.8 million in assets, 34,034 members) offers loans for up to $5,000 and 8.9% fixed rates for 24 months.
- AllyFed Credit Union, New Castle, Del. ($22.1 million in assets, 3,552 members) offers rates as low as 5% on loans up to $2,000 for 12 months.
- FiCare Federal Credit Union, Tampa, Fla. ($52.1 million in assets, 6,272 members) offers $2,500 loans at 13.95% for up to 18 months.
- Alabama River Credit Union, Monroeville, Ala. ($19.8 million in assets, 2,091 members) offers a 12-month loan at 10.75% for up to $2,000.