Alternative solutions to the use of personal loans
A typical two week payday loan with a fee of $ 15 per $ 100 equates to an annual percentage rate, or APR, of almost 400%. 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.
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. “
But the convenience of getting cash quickly is needed, especially for struggling families.
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.
Modest Needs provides free âself-sufficiency grantsâ by matching applicants with donors.
Vines said there are charities across the country that offer everything from food aid to paying for utilities.
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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