When it comes to payday loans, credit unions offer a better alternative for almost anyone. Not just because of their rates on loans, which are far lower. But because of the reason they're in business: for people, not profits.

Probably no one assumes anyone in the financial industry feels beholden to anything but the almighty dollar. But Wisconsin's credit unions - 250 not-for-profit financial institutions - are primarily beholden to something else: their 2.2 million member-owners. It may be surprising, but there are still some lenders who aren't primarily in pursuit of profits.

If borrowers questioned the fundamental differences among lenders, they'd never take another loan that might be bad for them. Notice I said "might." Not every payday loan is toxic. People are willing to pay for convenience, for example. If you can repay your loan on time, all is well. You've just paid more for a service you can get for less elsewhere. Happens all the time.

But what if you can't repay within two weeks? Most payday borrowers find themselves needing to take out loan after loan - a cycle of debt that never ends. Despite their use of payday lenders, they just can't seem to get ahead.

So the question is not whether a payday loan is "bad" or at what particular rate of interest such a loan becomes "bad." The real question lies in the intent. What does the lender want from the transaction? For payday lenders, it's profit - no matter the casualties.

Enter credit unions - not-for-profit cooperatives. Their only motive for offering small, short-term loans is to help members. Because credit unions are owned by members and do not have stockholders, they have no incentive to gouge. For years, before payday lenders emerged, Wisconsin credit unions have offered affordably priced short-term loans every day, for amounts as small as $500 or even $100. These loans are used by people who might otherwise seek a payday loan at a rate as high as 525 percent. Payday loan alternatives from credit unions, in contrast, are offered at a fraction of the cost. Rates on credit unions' small, traditional loans are even less.

So it isn't true that there's nowhere else to go but payday lenders for small, affordable loans. The fact is credit unions' short-term loans entirely preclude the need for good-credit consumers to use payday lenders. Those with poorer credit who need a special loan can still get one from credit unions that offer them at far less than a payday lender while reducing their need for future payday loans.

That's because credit unions' loans may include education or counseling, require savings, allow more than two weeks for repayment, and prohibit rollovers. This encourages repayment, which improves credit scores and, in turn, qualifies borrowers for better rates.

Credit unions also make referrals to community resources for food, clothing, health services and so on - needs that, if met, might preclude the need for a loan.

Payday lenders offer none of this.

Because credit unions' primary motive is service, not profit-making, they save Wisconsin consumers $208 million per year, not just on short-term loans but a full range of services designed to help members save more, improve their credit and build wealth. Credit unions call it their REAL Solutions effort.

Knowing this, with whom would you rather do business?

Brett A. Thompson, Pewaukee, is president and CEO of the Wisconsin Credit Union League.

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