BATON ROUGE, La. (WAFB) — Payday loans are short-term, high-cost cash loans, typically $500 or less.
It’s usually due on the day of your next payday, but when you pay it back, you’ll likely have to pay a fee ranging from $10 to $30 for every $100 borrowed.
A typical two-week payday loan with fees of $15 per $100 equates to an annual percentage rate, or APR, of almost 400%.
But the convenience of getting quick cash is needed, especially for struggling families.
“The pandemic has really exacerbated issues with payday lenders, especially in low-income and black communities,” said Brian Vines, investigative reporter at Consumer Reports. “So 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, like finding a community development financial institution (CDFI) near you.
“CDFIs are financial service providers, like a bank or 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 little 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 offering everything from food aid to helping pay for utilities.
Modest Needs provides free “self-sufficiency grants” 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 research to see which grants or programs may meet your needs.
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