For additional information, contact:

March 3, 2010 Vanessa Walters

Marketing Copywriter
Alabama Telco Credit Union
Phone: (205) 985-2872
Fax: (205) 444-3745

FOR IMMEDIATE RELEASE

Payday Loans: Consumers Should Seek Alternatives

Birmingham, AL – In today’s tough economy, payday loans have become increasingly

popular. Payday loans are referred to as cash advance loans, check advance loans, post-
dated check loans or deferred deposit loans. They work much in the way the name
suggests. Typically a borrower writes a personal check payable to the lender for the
desired borrowed amount plus a fee they must pay for borrowing. The lender then gives
the borrower the amount of the check - less the fee - and agrees to hold the check until
the loan is due, usually the borrower’s next payday.

“Payday loans are a quick way to get money when you don’t have it now, but it comes at
a high price,” explains Billy Chancellor, Alabama Telco Credit Union’s Senior Vice
President of Lending. “The truth is the average fee for a payday loan is $15 per $100
borrowed. If you translate that two-week advance into an annualized rate, as on a credit
card, you’re looking at a 391 percent interest rate. Many consumers tend to extend their
loan and end up paying more in fees than what they borrowed. So the bigger problem lies
in the fact that payday loans become a trap for consumers and not a one-time thing,
putting many consumers on a perpetual debt treadmill,” adds Chancellor.

Consumers do have alternatives. Credit unions and some banks offer short-term loans for
small amounts at competitive rates. Another option is a home equity line of credit.
Consumers can use the equity in their home to consolidate debt while paying a much
lower rate. Credit cards are also another solution, if it’s the right credit card. Today’s
financial experts recommend credit cards from credit unions because of their little to no
fees, reasonable credit limits and low interest rates.
For those consumers who have money but are either learning how to better manage it or
are worried about covering their transactions or checks, ask your financial institution
about overdraft protection on your checking account. Overdraft protection can help cover
checkbook errors and protect you from further credit problems. There is a fee associated
with it, but it may be a better option than the total fees accumulated from the length of a
payday loan.

For more tips and products designed to help you manage your debt and credit, visit
www.alatelco.org.

Alabama Telco Credit Union is a full service financial institution with branches located
across the state of Alabama. With assets in excess of $463 million, Alabama Telco serves
more than 52,000 members with friendly and professional service. Alabama Telco Credit
Union has a “5 STAR” Superior Rating by Bauer Financial for Safety and Soundness.

Membership in Alabama Telco is available to anyone living, worshipping, working or

attending school in the following Alabama counties: Madison, Montgomery, Autauga,
Elmore, Pike, Tuscaloosa, Talladega, Jefferson, Shelby, St. Clair, Calhoun, Baldwin,
Mobile, Houston, Coffee and Geneva. It’s also available to employees or members of a
qualifying group or organization as well as relatives of current Telco members. For
more information on Alabama Telco Credit Union, visit www.alatelco.org or call
1-800-24TELCO.