Ethical subprime lenders are now expanding beyond mortgages. Ed Jacob, manager and CEO of Chicago's North Side Community Federal Credit Union, was alarmed to learn that many of his 2,700 members, most of whom have less than $100 in their accounts, were relying on the "second-tier financial-service marketplace": check-cashing outlets and payday lenders, which charge exorbitant fees. So he rolled out a Payday Alternative Loan (PAL), $500 for six months at 16.5 percent. The delinquency rate on the more than 5,000 PALs extended thus far is 2.5 percent. "For payday lenders, it's a success if customers keep taking out loans. To me, it's a success if they don't have to anymore," Jacob says. He believes such loans can build a credit history and help "move people to better products for them and us—auto loans and, eventually, mortgage loans."
I was looking at NorthSide's webpage, and suddenly realize I was looking at a picture of Anna from Inspiration Cafe and her son (saw her once when we got cubs tickets delivered to our door.) Although I appreciate the convenience of Chase I really feel like I could be doing something better with my money. Always felt like credit unions were a more ethical (if less convenient) place to keep money. It's refreshing to see people taking positive steps to break the stupid cycle of poverty in so many lives.
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