Payday Loan Alternatives
Are there alternatives to payday loans?
To provide credit union members with an alternative to high-cost payday loans, the National Credit Union Administration (NCUA) allows under its regulation federal credit unions to offer small-dollar loans called payday alternative loans (PALs).
PALs include specific consumer protection features:
- Loan amounts between $200 to $1,000.
- The borrower must be a member of the federal credit union for at least 1 month.
- The term of the loan must range from 1 to 6 months.
- The federal credit union can charge an application fee only in the amount needed to recoup the actual costs associated with processing the borrowers application, up to $20.
- The PAL cannot be rolled over.
Some credit unions additionally offer free financial counseling services to their members. Contact your
local federal credit union for availability of payday alternative loans and free financial counseling services.