Joining a credit union to borrow a small amount

Updated 2026-11-11 · Sources: MyCreditUnion.gov (NCUA), CFPB

A credit union can be one of the cheaper places to borrow a small amount. Federal credit unions may offer Payday Alternative Loans, known as PALs, and you generally need to have been a member for at least one month before you can get one. So the best time to join is before you need the money.

This guide explains what a PAL is, what the NCUA rules say, and what to ask a credit union before you sign up. eFundingFlow is not a credit union and not a lender; we point to these routes because they can cost less than a short term loan.

What a Payday Alternative Loan is

MyCreditUnion.gov, the consumer site of the National Credit Union Administration (NCUA), describes PALs as small dollar loans that federal credit unions are allowed to offer as an alternative to high cost payday loans. According to that page:

PAL amounts can range from $200 to $1,000.
The loan term must run from one to six months.
The credit union can charge an application fee only to recover its actual processing cost, up to $20.
The maximum APR on a PAL is 28%.
Up to three PALs may be granted to the same borrower in a six month period, as long as none overlap or are rolled over.

Compare that with the CFPB example of a typical payday loan: a fee of $15 for every $100 borrowed over two weeks, which the CFPB says equals an APR of almost 400 percent.

The one month membership rule

MyCreditUnion.gov says you may be able to get a PAL if you have been a credit union member for at least one month. That means a PAL rarely helps on the day a bill lands if you are not already a member. Joining early, while things are calm, keeps the door open.

Membership rules differ between credit unions. Ask what makes you eligible to join, how much the opening deposit is, and how long it takes for your account to open.

Not every credit union offers PALs

Federal credit unions are allowed to offer PALs, but they are not required to. MyCreditUnion.gov also notes that many state chartered credit unions offer products similar to PALs, and that federal credit union loans that are not official PALs can have a maximum APR of 18%, though they may have stricter eligibility rules.

The same page warns that some online lenders use the words "payday alternative loan" even though they are not credit unions. Read the fine print and check who the lender is.

Questions to ask at the branch

Do you offer Payday Alternative Loans, or a similar small loan?
How long do I need to be a member before I can apply?
What is the application fee, and what is the APR?
How long would the loan run, and what would each payment be?
Do you offer free financial counseling? MyCreditUnion.gov says some credit unions do.

Other routes to try while you wait

The CFPB suggests asking the company you owe for more time or a smaller payment, checking whether an employer, nonprofit or community group offers advances or emergency credit, and asking family or friends you trust. A lower rate credit card may also cost less than a payday loan. Our alternatives ladder sets these out in rough order of cost.

If you still need to borrow

If a credit union route is not open to you yet, eFundingFlow can send one request for $100 to $5,000 to lenders in its network. It is free to ask and there is no obligation to accept. Short term loans can cost much more than a PAL, so read the APR, fees and payback date on any offer before you say yes.

Go to the request form

Quick answers

Can I get a PAL the day I join?

Usually not. MyCreditUnion.gov says a PAL may be available once you have been a member for at least one month.

Is a PAL cheaper than a payday loan?

By the published limits, yes: a PAL is capped at 28% APR, while the CFPB says a typical two week payday loan works out to almost 400 percent.