Payday Lender Spreads False Claims Against Self-Help Credit Union
July 10, 2009
A recent industry blog claimed that divisions of Self-Help Credit Union offer a line of credit whereby a "customer pays a monthly fee of either $25 or $40, based on amount of credit used. For overdraft loans up to $250, the fee is $25. For loans up to $500, the fee is $40." This statement is patently false. The blog then went on to use this false statement to calculate an APR for a $500 line of credit loan from Self-Help Credit Union that ranges from 208 percent to 2920 percent. This calculation, based on false information, is also inaccurate.
No divisions of Self-Help Credit Union have ever charged customers a monthly fee of $25 or $40 for having access to an overdraft line of credit. Self-Help Credit Union offers an overdraft line of credit, subject to the loan approval guidelines of the credit union, at an annual interest rate of 16 percent, with no additional fees. To help ensure customers pay down their debt over time, the credit union establishes minimum repayment terms on this line of credit. The minimum repayment is $25 per month if the balance is $250 or under and $40 per month if the balance is between $250.01 and $500. Indeed, the figures described in the post are not the monthly fees associated with the line of credit; rather, they are the required monthly minimum payments.
The blog post also claimed that a $500 overdraft line of credit from Self-Help Credit Union, repaid in three days, would cost the customer $40, carrying an APR of 973 percent. This statement is also false. The loan described would carry an APR of 16 percent, with no additional fees, costing the customer 66 cents.
The blog's apparent purpose was simply to cause harm to the reputation of the Center for Responsible Lending and Self-Help Credit Union by spreading false statements. But in the long term, such actions only serve to harm consumers and the public.
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