Alternatives to Payday Loans
BATON ROUGE, Louisiana (WAFB) – Payday loans are short-term, high-cost cash loans, typically $ 500 or less.
It’s usually due on your next payday, but when you pay it off, you’ll likely have to pay fees ranging from $ 10 to $ 30 for every $ 100 you borrow.
A typical two week payday loan with a fee of $ 15 per $ 100 equates to an annual percentage rate, or APR, of almost 400%.
But the convenience of getting cash quickly is needed, especially for struggling families.
âThe pandemic has really exacerbated the problems with payday lenders, especially in low-income and black communities,â said Brian Vines, investigative reporter at Consumer Reports. âSo what we’ve seen is this push to bring better and fairer banking services to these communities. “
He shared some alternatives to using payday loans, such as finding a community development financial institution (CDFI) near you.
“CDFIs are financial service providers, like a bank or a credit union, whose mission is to bring financial services to low-income communities, places that many traditional banks have largely excluded,” he said. -he explains.
Joining a CDFI can be an affordable option. They can offer free or low cost banking services with an initial deposit as small as $ 25.
Another avenue to try is to find a nonprofit organization that offers a payment relief program.
Vines said there are charities across the country that offer everything from food aid to paying for utilities.
Modest Needs provides free âself-sufficiency grantsâ by matching applicants with donors.
Groups like Catholic Charities and Lutheran Services in America provide a variety of resources regardless of religious affiliation.
It’s worth taking the time to do your research to see which grants or programs may meet your needs.
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