The investigatative article found that at least 15 credit unions are offering high-cost loans that closely resemble traditional payday loans, including Mountain America FCU in Salt Lake City (see image) and Kinecta FCU in Manhattan Beach (CA).
The article cites the case of Sam Heredia who borrowed $400 every two weeks for the past year from Nix Check Cashing, a subsidiary of Kinecta FCU. This means that Heredia paid $1000 in interest and fees over that year on $400 that was revolved every two weeks. Nix charged Heredia an application fee each time the loan was renewed.
Thomas Glatt, a credit union industry consultant, is quoted as saying:
"Not every credit union is as pure as they could be. If they are offering something similar to what is sold on the street corner, you have to wonder if that is keeping with the credit union philosophy."
While there are credit unions that are responsibly offering payday loan alternatives, it is clear that some credit unions are putting profits first.
Read the Washington Post article.
A longer version of the article appears on the iwatch news website.