Before taking out a high-cost payday loan, consider alternatives. Talk with your creditors to negotiate more time to pay bills. Borrow from family or friends. Shop for a credit offer with lower costs, like a low-rate credit card. Inquire about an advance from your employer. Contact your state or local government to see if any emergency assistance programs are available. If you have an account at a credit union or bank, ask about less expensive alternatives available to you, especially if you have direct deposit or a stable credit history. Active duty service members can seek assistance from a service relief society or military welfare society.
Federal Credit Unions: Payday Alternative Loans (PALs)
To provide credit union members with an alternative to high-cost payday loans, the National Credit Union Administration (opens new window)(NCUA) allows federal credit unions to offer small-dollar loans called PALs. The borrower must be a member of the credit union for at least 1 month.
A federal credit union can charge an application fee only in the amount needed to recoup the actual costs associated with processing the application, up to $20. PAL amounts can range from $200 to $1,000. The loan term must range from 1 to 6 months. Up to three PALs may be granted to the same borrower during a six-month period, as long as no PAL overlaps or is rolled over.
Some credit unions also offer free financial counseling services to their members. Contact your local federal credit union for availability of PALs and free financial counseling services.