A typical two-week payday loan with a $15 per $100 fee equates to an annual percentage rate, or APR, of almost 400 percent. It’s typically due on your next payday but when you pay it back you will probably pay a fee ranging from $10 to $30 for every $100 borrowed.
“The pandemic really exacerbated the problems with payday lenders, especially in low income and Black communities,” said Brian Vines, an Investigative Reporter at Consumer Reports. “So what we’ve seen is this push to bring better and fairer banking services to these communities.”
But the convenience of getting fast cash is necessary especially for struggling families.
He shared some alternatives to using pay day loans like finding a Community Development Financial Institution (CDFI) near you.
“CDFI’s 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 explained.
Joining a CDFI can be an affordable option. They can offer banking services at no or low cost with an initial deposit as small as $25.
Another route to try is to find a non-profit organization that offers a payment relief program.
Modest Needs awards fee-free “self-sufficiency grants” by matching applicants with donors.
Vines said there are charitable organizations across the country offer everything from food assistance to help paying utilities.
Groups like Catholic Charities and Lutheran Services in America provide a variety of resources regardless of religious affiliation.
It’s worth it to take the time to do the research to see what grants or programs can fit your needs.
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