Debbie Matz, chairman of the National Credit Union Administration, issued a letter to the Washington Post’s editor in response to the story that ran last week: “More credit unions offering payday loans.” In the letter she says:

We recently authorized federal credit unions to develop loans designed to offer members much more affordable short-term cash. Yes, at 28 percent, these loans have a higher annual percentage rate than conventional loans, which are capped at 18 percent. But compared to the triple-digit costs of payday loans, these alternatives are very attractive.

When we did the math on credit union short-term loan alternative (or STS loan) given by the reporter in an MSN Money article the APR went into the triple digits. (Scenario: $300 loan, 1 month, 28 percent interest rate, plus fees). CFSA will be putting out a media statement soon, so stay tuned.

Payday Pundit put out a couple posts last week on the issue, click on the below to review:

Re: Washington Post/Ben Hallman’s story

Re: MSN Money’s pickup of the Ben Hallman story