Credit unions offer attractive alternatives to payday loans. Payday loans are generally small-dollar, short-term loans that borrowers promise to repay from their next paycheck or salary deposit. Exorbitantly high interest rates and fees often accompany them.  Borrowers who cannot repay these loans in two weeks are often forced to roll over the loans and can be trapped in a cycle of borrowing repeatedly.

Federal credit unions can offer short-term small loans with an interest rate up to 28 % under the following conditions:
 
• Principal Amount: $200-$1,000 
• Term: 1-6 Months 
• Application Fee: $0-$20 (based on actual costs) 
• Eligibility: Member for at least 1 Month 
• Amortization: Fully Amortized (no balloon payments) 
• Rollovers: Prohibited 

NCUA designed the short-term small loan program to allow federal credit unions greater flexibility in providing alternatives to payday loans.