Beware of high fees, high interest rates on payday loans
If you are having trouble paying your bills, you might want to consider a payday loan. But Consumer Reports is warning you that you need to be careful! Even with some recent reforms, many of these instant loans still come with high fees and very high interest rates. The good news is that there are alternatives – if you know where to look.
The pandemic has really exacerbated the problems with payday lenders, especially for low-income people and black communities. So there has been a push to provide them with better and fairer banking services.
What can you do now if you need emergency cash quickly? First, find a Community Development Financial Institution (CDFI) near you. They 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.
And joining a CDFI can be affordable. They offer free or low cost banking services with an initial deposit as small as $ 25.
Another avenue that you can take is to find a nonprofit organization with a payment relief program. For example, Exodus Lending is a non-profit organization dedicated to helping people get out of payday loan debt. These groups consolidate your loans without fees and interest.
If you are still considering a payday loan, state laws differ in Georgia and Florida. This is generally illegal in Georgia, unless the lender has a special state license. Here are the rules: https://dbf.georgia.gov/payday-lending
It’s legal in Florida but state regulated with consumer protections. Here are the rules: https://flofr.gov/sitePages/PaydayLenders.htm.
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