Credit Union PAL Loans

What a PAL is

A Payday Alternative Loan is a small, short loan from a federal credit union, made under rules set by the National Credit Union Administration. The rules are the point: the interest rate is capped at 28% APR, the application fee is capped at $20, and the loan can't be rolled over into a new one. Nothing else on this site comes close to that price.

There are two versions, and a credit union may offer one or both.

PAL I lends $200 to $1,000 for one to six months. You need to have been a member for at least a month.

PAL II lends up to $2,000 for one to twelve months, and you can apply the day you join.

What $500 really costs

Borrow $500 over six months at the 28% cap and you pay back about $542 in total. The same $500 from a first-time subprime installment lender at 779.97% APR costs about $2,437 over seven months. That's the whole reason this step sits above the others.

How to get one this week

Most people skip this option because they think credit unions are members-only clubs. They are — but joining is usually a formality. Many federal credit unions accept anyone who lives, works, worships or studies in a county they serve, and some accept anyone who joins an associated charity for a small one-time fee.

Start with the NCUA's credit union locator (mycreditunion.gov) and filter for federal credit unions near you. Call and ask three questions: "Do you offer Payday Alternative Loans?", "Which version — PAL I or PAL II?", and "What do I need to bring to join today?" Expect to need a photo ID, proof of address, your Social Security number and a small opening deposit, often $5 to $25.

What they'll check

Credit unions look at your credit report, but a low score is not an automatic no. They'll want to see steady income and a checking account, and they'll want you to be able to afford the payment. Some will ask for a recent pay stub. If you're turned down for a PAL, ask whether they offer a small personal loan or a share-secured loan instead; both are usually far cheaper than anything on step 5.

Two things to know

You can take up to three PAL I loans in a six-month period, but never more than one at a time, and no credit union can roll a PAL over into a new one. That's a protection, not an obstacle — it's what stops this from becoming the cycle that payday loans create.

And if your credit union doesn't offer PALs at all, ask about their regular small-dollar loan. Federal credit union loan rates are capped at 18% APR — an NCUA ceiling the board has extended through September 2027 — which is still a fraction of anything below this step.